The Buy American provisions of the Inflation Reduction Act and Bipartisan Infrastructure Law have proven controversial in some quarters, but they are integral and necessary components of both programs. EVs require raw materials, many of which are disproportionately extracted and processed in countries that we don’t want to rely on. Thus, any comprehensive program to encourage electrification has to include strong incentives for producers to build new supply chains.
The IRA and BIL are designed to wean battery makers off of materials from “entities of concern.” Now the White House has officially announced what everyone already knew: this means China.
One of the most critical materials of all is graphite. This crystalline form of carbon has a long and complex supply chain that includes several processing steps betwixt mine and battery pack—and that chain is dominated to an extraordinary extent by China. That country recently upped the ante by announcing export restrictions that could allow it to throttle the supply of graphite (not just out of spite, but because they need the stuff for their own EV industry).
Charged asked John DeMaio, CEO of graphite producer Graphex, for his thoughts on the likely results of the administration’s latest announcement.
“The White House’s long-anticipated designation of China as a foreign entity of concern officializes what Graphex Technologies has been exhorting for years: that a secure, stable, and abundant critical mineral supply chain involves both overall expansion and diversification away from China,” DeMaio told Charged. “While this news may briefly inconvenience battery makers (and the consumers who want their $7,500 tax incentive), it will help the US to get its own supply chains up and running.”
DeMaio tells us that China currently controls 69% of the world’s graphite mining and over 90% of graphite processing. This spells opportunity for his company, which is partnering up with graphite miners around the world, and is building new facilities in Michigan and (in partnership with Canadian miner Northern Graphite) in Quebec.
DeMaio sounds optimistic that clarifying the rules will be a positive step for the industry. “FEOC designation is a fire alarm to the rest of the EV industry that the China-based status quo is burning: at least for graphite, the future will be global mining and domestic processing. This announcement will help us get there.”
Source: Graphex Group