Energy & Resources

The graphite grab

Chinese miners keen not to repeat rare earth mistake

Novak Djokovic of Serbia hits a return during his men's singles quarter-final tennis match against Marin Cilic of Croatia at the Wimbledon Tennis Championships, in London

Smash it: Djokovic’s graphene-enhanced racket is now unbreakable

We are now in the second week of Wimbledon and if Novak Djokovic, the number one men’s seed, goes on to win the tennis crown it may well be partly thanks to the graphene in his racket. His equipment supplier, Head, uses the mineral to improve racket performance by redistributing weight from its shaft to the grip and head.

Scientists at the University of Manchester first confirmed graphene’s properties in 2004, after using sticky tape to peel off ever-thinner layers from pencil lead until they were down to the last atom. They found that while this final layer of graphite looks like lowly chicken wire, it is 200 times stronger than steel, one million times thinner than paper and can carry 1,000 times the electrical current of copper wire.

The mineral is also extremely pliable, which means that one day in the near future, Djokovic may even be able to hurl his racket to the ground in a fit of pique, knowing it will bend rather than break.

Graphene has been dubbed the miracle mineral by its supporters who believe it will soon displace silicon and plastic across a range of industries from electronics to biotech.

One big fan of its revolutionary properties is Ren Zhengfei, the founder and president of Huawei Technologies. In a rare media interview last month, Ren described graphene as “the absolute frontier of technological innovation”. His words had an immediate effect on Chinese investors who piled into graphite concept stocks such as Zhongchao Cable and Fangda Carbon, which all jumped 9% to trading limits the following day.

Ren’s words will have been welcomed by Zhang Bin, the president of the Chinese Graphite Industry Association and also the boss of Inner Mongolia Rising, China’s largest graphite miner. But in an interview also published last week, Zhang argued that China is in danger of squandering its graphite resources. It is sitting on 77% of the world’s proven reserves, but at current extraction rates that could be all gone within 20 years, he said.

Zhang told the China Economic News that the authorities need to start treating graphite with the same importance as rare earths. Otherwise China’s fragmented and inefficient miners will simply export the lot to foreign companies on the cheap.

Flaked graphite, as it is known, is often processed abroad for high-end applications, and then imported back into China at far higher prices. Zhang cited the isotropic graphite used in China’s domestic power industry. It is almost entirely sourced from Japan’s Toyo Tanso at Rmb450,000 ($72,463) per tonne versus the Chinese export’s cost price of Rmb50,000 per tonne.

Graphite can be synthetically produced but the largest end user – steel refractories – rely on natural graphite as protective insulators. According to Industrial Minerals magazine, refractories account for 40% of current global demand, followed by auto parts and lubricants (14%) and carbon brushes in electric motors (12%).

However, the fastest growth in consumption is coming from batteries, especially lithium-ion batteries, which currently make up 15% of the battery market.

Demand is growing at a compound annual rate of about 40% thanks to battery usage in electric cars. For instance, Industrial Minerals, a minerals intelligence provider, says that Tesla Motors will need about 126,000 metric tonnes of graphite every year by the time its $5 billion battery-producing ‘gigafactory’ is fully operational in 2020. This one factory alone will account for 34% of current global output of flaked graphite. Tesla currently sources spherical graphite from Japan’s Panasonic, which in turn imports it from, guess where – China.

In the meantime analysts believe that graphite prices are likely to move upwards this year as global supply is impacted by measures in China to consolidate the domestic industry and clean up some of the pollution caused by graphite rain, which has pushed pollution levels in some rivers to vastly exceed national limits.

Last December, there was a blanket shutdown for graphite plants in Shandong province, which accounts for 20% of Chinese production. Then in April, the Heilongjiang government released a clean-up plan. It accounts for 45% of Chinese production and 29% of global output. The campaign included measures to reduce the number of mining rights from 36 to 25 and a ban for new plants with projected annual capacities below 20,000 tonnes. Current plants will have until September to upgrade processing equipment, much of which is more than 30 years old, or face being shut down.

The provincial governments also want to create hi-tech parks to push the industry further up the value chain. But there are signs that China is already well down that road. According to CambridgeIP, China has filed 2,200 graphene patents, the most of any country in the world. And the newly founded Xiamen Graphic Institute has attracted one of the Nobel Prize winning scientists from Manchester University who did the groundbreaking research on graphene. He moved to China in May.

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