Australian graphite companies have surged higher on the ASX today after China announced restrictions on graphite exports, effective December 1.
While the specifics of the export limitations are not yet clear, experts say any extended cut in graphite exports from China would severely disrupt lithium-ion battery anode production outside of China and, consequently, affect global EV manufacturing, given the crucial role graphite plays in EV batteries.
China accounts for approximately 67% of global graphite production and is the dominant miner and downstream producer, according to Benchmark Mineral Intelligence.
This development comes on the heels of recent US restrictions on semiconductor sales to Chinese firms and the European Union's deliberation over tariffs on Chinese-made EVs, purportedly subsidised by the Chinese government.
Shares in Syrah Resources, which operates the Balama mine in Mozambique, soared 8.5% to 57.5 cents. Renascor Resources, which is developing a graphite mine in South Australia, saw its stock climb 10.9% to 12.2 cents.
Evolution Energy Minerals Ltd (ASX:EV1), which is focused on its development-ready Chilalo Project in southeast Tanzania, also experienced significant gains of 17.9%.
Sarytogan Graphite Ltd (ASX:SGA), which has the highest grade graphite and second largest contained graphite resource of any ASX-listed graphite company at its namesake Kazakhstan project, gained 23.53%.
International Graphite Ltd (ASX:IG6), which is on track to be the first producer of battery anode graphite in Western Australia, has added 10%.
Very positive for graphite prices
Financial advisory firm Shaw and Partners expects this policy to be "very positive for near-term graphite prices" and retains its buy recommendations across the sector. Shaw further noted that given the "forecast demand anywhere in the world, graphite prices must move up to incentivise new production."
The policy is significant for the emerging battery anode supply chains in Western countries, including the United States, where graphite is deemed a strategic critical mineral. And given the expected growth of the global EV market, the demand for graphite is likely to surge, making these export controls a pivotal factor for graphite’s global supply chain.