HONG KONG—China is strengthening restrictions on exports of graphite, a key mineral needed for the production of electric-vehicle batteries and fuel cells, the latest move in an intensifying global tussle over the building blocks of critical technologies.
Citing national-security concerns, China’s Commerce Ministry said Friday that exports of several categories of natural and synthetic graphite materials would require permits under a system used to control trade in items with dual civilian and military uses starting Dec. 1.
The restrictions cover a small but valuable portion of the graphite industry that China dominates and that has uses in strategic markets ranging from energy storage to nuclear power.
The curbs come days after the U.S. tightened restrictions on Chinese companies’ access to semiconductors, including stopping the sales of artificial-intelligence chips made by
and Intel. It arrives as the EV supply chain becomes a source of intensifying friction between Beijing and the West, with Chinese manufacturers and battery makers going global and Europe last month launching an antisubsidy probe into Chinese EV makers.
The Commerce Ministry said the move wasn’t intended to target specific countries, and would “benefit the security and stability of the global supply chain as well as safeguard national security and interests.”
Analysts said the policy allows China to leverage its dominance over the global graphite market and steer resources to help Chinese companies overseas.
This year, China is expected to produce all but 2% of the world’s supply of spherical graphite, a form of graphite subject to the new restrictions that is used in battery anodes, according to a forecast by Benchmark Mineral Intelligence, an energy and supply-chain consultant.
China is also expected to account for more than two-thirds of this year’s supplies of flake graphite and synthetic graphite, both also covered by the new restrictions, according to the forecast.
“China already has the biggest say in the global graphites market,” said Chang Jiang, an analyst with Leadleo, a Chinese research institute. The move would “help China’s strategic planning in batteries, new energy and other sectors.”
Currently, most of China’s graphite exports go to Korea, U.S. and Japan, according to Intelligence Research Group, a consulting firm in Beijing.
The new restrictions could lead to trade disputes with the EU and the U.S., said Lu Baoying, an analyst at the company.
“The electric vehicle industry will be the first to feel the impact,” she said.
Graphite is listed by both Beijing and Washington as a key strategic mineral. It is a soft form of carbon that occurs naturally in rocks such as marble, schist and gneiss. Artificial graphite, favored by car and battery makers for its consistency and performance, is fabricated by heat treatment of petroleum coke, coal-tar pitch or oil.
High-purity natural and synthetic graphite are vital to the clean-tech industry and can be used as pebbles for modular nuclear reactors, in composites for wind turbines and for lithium-ion battery anodes, according to the U.S. Geological Survey. Crystalline flake graphite can be processed into graphene, which is used to make solar panels, transistors and tablet computers.
China has imposed some level of restriction on exports of graphite since 2006. The new rules make the controls clearer and more specific, according to Chang Ke, a Shanghai-based analyst at Mysteel, another Chinese consulting firm.
The new rules require any would-be Chinese exporter of the covered graphite materials to provide extensive details on what products they want to sell abroad, and to whom.
The export controls imposed on graphite resemble similar curbs that China started to impose in August on germanium and gallium, two minerals critical to the production of semiconductors.
Graphite has already been a point of contention between China and Sweden, home to Europe’s largest homegrown battery maker. China stopped approving export licenses for synthetic graphite to the Scandinavian nation in 2020, according to a report filed last month by Sweden to the European Commission, making it difficult for Swedish companies to build up graphite anode production needed for the battery supply chain.
In May, a Chinese battery-materials supplier named Putailai New Energy Technology announced a $1.5 billion investment to build Europe’s largest anode factory in Sweden.
Rachel Liang and Clarence Leong contributed to this article.
