Site icon IER

Biden Pouring Money into Africa for Graphite

  • President Biden announced loan guarantees in Mozambique for a graphite mine, and the EU has proposed to fund a railroad in the Lobito region of Africa to connect cobalt-rich Congo with copper-rich Zambia.
  • Biden’s energy transition will boost the demand for graphite, an essential ingredient in EV batteries, and one where China controls 90 percent of world production.
  • President Biden is spending money across the globe to spur mining he has turned his back on in the United States, having stopped the mining of cobalt and copper in the Duluth Complex in Minnesota.

Like most critical minerals, China dominates the supply picture for graphite, a nonmetallic mineral with properties akin to metals including the ability to conduct heat and electricity. New investments in the United States and Europe, however, are trying to challenge China’s stranglehold on graphite used in most electric vehicle batteries, but industry experts believe it to be an uphill battle. Regardless, President Biden is pouring money into the endeavor. Biden is offering funding for a Mozambique project near a conflict zone that is slated to feed graphite to a processing facility in the United States. At a recent meeting, Biden announced that his administration, pending a notification to Congress, will offer a conditional loan of up to $150 million to boost mining and processing of graphite at a facility in Balama, Mozambique, a poor region facing an ongoing and deadly Islamist insurgency. The Biden administration has been increasingly focused on building out railways and corridors connecting mineral-rich areas in Africa to global ports in order to boost “clean” energy. China, which dominates global mineral supply chains, has already built out infrastructure in Africa and other countries through its Belt and Road Initiative.

Accessing Graphite in Mozambique

The funds for the mine in Mozambique would directly support Twigg Exploration and Mining, a subsidiary of the Australian company Syrah Resources Ltd., which owns and operates the Balama Graphite Operation in the province of Cabo Delgado in Mozambique, according to a White House fact sheet. The project was completed at the end of 2017 and became operational a year later. The mine and processing plant in Mozambique have direct connections to the Biden administration’s electric vehicle program in the United States. In April, the Energy Department announced a conditional commitment to loan $107 million to a subsidiary of Syrah Resources to expand its graphite anode plant in Vidalia, Louisiana. That facility, which has a supply deal with Tesla, is slated to use graphite mined and processed at the facility in Mozambique. According to Syrah, the new infusion of money is a conditional loan commitment to its subsidiary with a term of up to 13 years.

The region of Mozambique where the graphite mine is located, however, continues to see unrest. In June 2022, attacks near its Mozambique mine prompted the company to stop using a primary transportation route for about a week. Syrah was also forced to temporarily evacuate its mine in the fall of 2022 due to the proximity of armed attacks. The conflict-monitoring organization Armed Conflict Location & Event Data Project reported that Mozambique has seen more than 4,700 reported deaths tied to political violence since the fall of 2017 and much of the conflict is now occurring on Mozambique’s eastern coastal areas. The mine and processing facility is located in the southwest region of Balama. The project is one of many that emerged as part of the U.S. focus on Africa. Later this month, officials from the State Department will host its first workshop in Zambia and the Democratic Republic of Congo (DRC) to help develop supply chains for the electric vehicle production. China is heavily invested in the DRC and owns half of the large cobalt mines.

Also at the meeting, European Commissioner Ursula von der Leyen said Europe is backing an expanded effort to build a railroad in the Lobito Corridor. That rail project would connect the Democratic Republic of Congo, the world’s largest producer of cobalt used in lithium-ion batteries, and copper-rich Zambia, with global markets through a port in Angola. A $250 million financial package is being studied as an initial investment in the railroad.

While Biden is pouring funds into African mines, he has stopped the mining of cobalt and copper in the Duluth Complex in Minnesota. The “Twin Metals Project” would have tapped the Duluth Complex within the Superior National Forest, where 88 percent of American cobalt reserves are found. Biden’s Department of the Interior blocked the nearly $3 billion mine, withdrawing more than 225,000 acres of the Superior National Forest from consideration for mining operations for 20 years. The agency’s decision to block the project is a major step backward for American mineral independence and a major win for China.

Synthetic Graphite

Because of China’s stranglehold, there is interest in producing synthetic graphite, an element developed in the late 19th century, but only directed toward electric vehicles in the past decade. Some believe synthetic graphite could account for nearly two-thirds of the EV battery anode market by 2025. Each electric vehicle on average needs 110 to 220 pounds of graphite in its battery pack for the anodes, the negative electrodes of a battery–about twice the amount of lithium needed. While the market for synthetic graphite is expected to grow more than 40 percent over the next five years to $4.2 billion in 2028, companies looking to produce synthetic graphite face formidable competition from China. China refines more than 90 percent of the world’s natural graphite and Chinese battery materials companies are investing hundreds of millions of dollars to ramp up production of synthetic graphite, which it also dominates.

While Chinese producers control a significant share of the small, but growing synthetic graphite market, new companies will find it easier to enter the synthetic graphite market because it is easier to set up a synthetic graphite production facility than it is to commission new mining sites for natural graphite and because new facilities do not need to be located near a graphite mine. New synthetic graphite production operations in the United States, including an $800 million plant in Bainbridge, Georgia, and a $160 million plant in Chattanooga, Tennessee, will benefit from incentives included in the Inflation Reduction Act and the bipartisan Infrastructure Investment and Jobs Act. Even with federal incentives, however, the construction of new production facilities for synthetic graphite requires a huge investment.

The benefits of synthetic graphite include faster charging and longer battery life. Also, synthetic graphite is generally higher purity and offers better and more predictable performance than natural graphite. Further, the price gap between the two has narrowed significantly this year, driving producers to blend even more synthetic material into their battery anodes, which represent less than 10 percent of the cost of an EV battery cell.

In the meantime, China will continue to dominate synthetic graphite production, with Chinese production of the material expected to grow from about 1.6 million metric tons this year to 2 million in 2030. China is likely to be the biggest player in this market for the next 10 or 20 years.

Conclusion

Biden is pouring money into his pet projects to obtain a net zero carbon future, which is precisely what China wants him to do because China already dominates the supply chain for the critical minerals needed. Further, China is growing its dominance by continuing to pour funds into developing the minerals as it sees Western countries firmly rooted in the “clean” energy transition. Rather than pursuing its strengths in fossil fuel resources, the United States, under President Biden’s direction, is pursuing an energy direction that needs decades to develop and which China started decades ago. It also means the United States must compete with China internationally in some of the most unstable areas in the world. The continuation of this approach will only mean that China will win the race and that U.S. consumers will be strapped with huge costs for energy and transportation.

Exit mobile version