China imposes export controls on graphite used for EV batteries

Move follows restrictions on key metals, heightening concerns for electric vehicle and semiconductor industries

China has announced export controls on certain categories of graphite, a material crucial for electric vehicle batteries.

The move follows Beijing's recent restrictions on the export of gallium and germanium, essential metals in the semiconductor, telecommunications and electric vehicle industries.

Reuters reported that China's Ministry of Commerce declared that starting from 1st December, three grades of graphite considered highly sensitive will be subject to dual-use item export controls, indicating applications that include the military. Similar to the restrictions on gallium and germanium, companies will be required to obtain a license for exporting graphite.

Graphite is a primary component for the anode side of lithium-ion batteries, with global demand projected to triple by 2033, currently standing at 770,000 tonnes. China, which produces 64% of the global natural graphite and over half of the artificial equivalent, refines 90% of the graphite used in EV batteries.

The commerce ministry clarified that the limitations are intended to: "safeguard national security and interests" and do not specifically target any country or region. Exports adhering to relevant regulations will be allowed.

The move should not come as a surprise. When China announced restrictions on exports of gallium and germanium in July, former vice commerce minister Wei Jianguo said it was "just the start" if the US continued to impose restrictions on the Chinese technology sector.

Analysts have suggested this move signifies China's strong negotiating stance with the US in the EV industry. There are concerns that the US might retaliate by restricting the use of Chinese batteries in EVs manufactured by Tesla, particularly given Tesla's significant production in Shanghai.

The US government recently expanded its ban on chip exports to China, lifting restrictions on chip communication speeds and emphasizing computing performance thresholds. As a result, certain chips, including Nvidia's A800, H800, and RTX 4090, previously compliant with the regulations, are now affected.