BEIJING: China said on Friday it would require export permits for some graphite products to protect national security, in its latest move to control supplies of critical minerals in response to challenges over its global manufacturing dominance.

China is the world’s top graphite producer and exporter. It also refines more than 90 per cent of the world’s graphite into the material that is used in virtually all EV battery anodes, which is the negatively charged portion of a battery.

“This bold and unexpected move by China in graphite has taken us by surprise, arriving far sooner than anyone could have predicted,” said Kien Huynh, chief commercial officer at Alkemy Capital Invest­ments, which is focused on developing projects in the energy transition metals sector.

Beijing is requiring export permits at a time when many foreign governments are increasing their pressure on Chinese companies over their industrial practices.

Beijing’s move comes after US placed curbs on Chinese firms’ access to semi-conductors

The European Union is weighing levying tariffs on Chinese-made EVs, arguing they unfairly benefit from subsidies. Also, the US government earlier this week widened curbs on Chinese companies’ access to semi-conductors, including stopping sales of more advanced artificial intelligence chips made by Nvidia.

The curbs are similar to those in place since Aug 1 for two chip-making metals, gallium and germanium. The restrictions have slashed exports of those metals recently and pushed up prices outside of the country.

China’s commerce ministry said the move on graphite was “conducive to ensuring the security and stability of the global supply chain and industrial chain, and conducive to better safeguarding national security and interests”.

It added that it was not targeting any specific country. Top buyers of graphite from China include Japan, the United States, India and South Korea, according to Chinese customs data.

Under the new restrictions, China will require as of Dec 1 that exporters apply for permits to ship two types of graphite, including high-purity, high-hardness and high intensity synthetic graphite material, and natural flake graphite and its products.

Three types of “highly sensitive” graphite items had already been under temporary controls, the commerce ministry said, and are included in the new list.

Controls dropped

It dropped temporary controls on five less sensitive graphite items used in basic industries such as steel, metallurgy, and chemicals.

With rising sales of electric vehicles, automakers are racing to lock in supplies from outside China, but shortages are looming.

“With this new graphite export curb, South Korean firms which heavily rely on China for graphite imports would need to seek alternatives, such as mines from the United States or Australia, but it would likely increase the cost burden for many,” said Kang Dong-jin, an analyst at Hyundai Motor Securities.

South Korea’s trade ministry said in a statement that it had held a meeting on Friday with battery and material makers on how to respond to the export curbs.

Published in Dawn, October 21st, 2023