Graphite Attack!

Power Up

By Andy Home, Senior Metals Columnist

Welcome to Power Up! In today's issue we look at how rising trade tensions between the United States and China are spilling into the lithium-ion battery space.

China is the world's dominant supplier of graphite, used as the anode in batteries, and it has just tightened controls on exports of the critical material to the United States. It's an ominous warning shot.

Also in today's issue, why U.S. power is becoming gassier but cleaner, how the U.S. solar sector is preparing for a Donald Trump presidency and the company looking to use biomass to power the planes of the future.

Top energy headlines

China's Graphite Controls

Graphite powder at a Volkswagen battery cell production plant— REUTERS/Fabian Bimmer

China is using its dominance in critical metals to retaliate against Washington's latest crackdown on the Chinese semiconductor sector. Beijing has banned exports of antimony, gallium and germanium to the United States. It has also placed tighter restrictions on shipments of graphite, extending trade tensions into the lithium-ion battery space.

Graphite is used as the anode in a lithium-ion battery and the battery sector accounts for 57% of global natural graphite demand, according to consultancy Benchmark Mineral Intelligence. China's share of global graphite production ranges from 80% to 96% depending on type and grade.

The new controls, effectively immediately, require stricter oversight of any graphite exports to the United States. The explicit target is graphite for dual-use products with military and civilian applications rather than U.S. battery anode production. U.S. batterymakers also have alternative supply sources such as Japan and South Korea.

However, China's new controls are likely to see exports slide in the coming months, generating waves of global supply-chain disruption that will wash into the United States.

Even more worrying is the implicit threat that China could restrict or ban exports of other critical battery materials in response to Trump's promised higher tariffs on Chinese goods.

Essential reading

U.S. power producers have raised total generation to new highs in 2024 fuelled by record natural gas-fired output and a jump in renewable generational. Energy transition columnist Gavin Maguire breaks down the numbers to show how the U.S. power system is getting gassier but cleaner.

U.S. thermal coal exports are on track to reach six-year highs in 2024. Domestic consumption is falling as coal-fired generation is phased out, meaning more volumes for the export market. Gavin Maguire explains why a new Trump administration could mean still higher exports in 2025.

Japan's long-term contracts to secure liquefied natural gas (LNG) from Russia's Sakhalin-2 project are nearing expiration. Declining domestic demand and rising geopolitical pressure may mean not all the contracts are renewed. As Katya Golubkova and Yuka Obayashi investigate, rival LNG producers are sensing an opportunity.

The U.S. solar trade group has unveiled its new lobbying strategy with a stress on the sector's role in national security and domestic job creation. Conspicuously absent are any references to either climate change or President Joe Biden's landmark Inflation Reduction Act (IRA). Nichola Groom reports on how the U.S. solar industry is repositioning itself in preparation for an incoming Trump administration.

Will biomass pellets be the future of long-haul aviation? Nina Chestney has the lowdown on a biomass supply deal between British power company Drax and Pathway Energy, which is planning a sustainable aviation fuel project on the U.S. Gulf Coast.