According to the researcher Mordor Intelligence, the market for synthetic graphite is expected to grow by over 40 percent in the next five years, reaching $4.2 billion in 2028. However, companies looking to break into this market face tough competition from China.
China currently refines more than 90 percent of the world’s natural graphite, which is used in the production of EV battery anodes. Chinese battery materials giants like BTR and Shanshan are investing large sums of money to increase their production of synthetic graphite.
As analyst Victoria Hugill from UK-based researcher Rho Motion explains, the introduction of synthetic graphite into the battery supply chain is well-established and successful in China.
“It’s astonishing to see the number and scale of participants in China, especially on the anode side,” says Chris Burns, CEO of Australian battery materials supplier Novonix. “Companies like BTR and Shanshan are growing at a disproportionate rate compared to the rest of the world.”
While Chinese producers currently dominate the synthetic graphite market, newcomers like Anovion, Novonix, and Vianode are being driven by two factors, according to Hugill.
Hugill explains that it is easier to set up a synthetic graphite production facility than to commission new mining sites for natural graphite. Producers can take advantage of incentives provided by the US Inflation Reduction Act to establish synthetic graphite capacity in the US or Free Trade Agreement partner countries. Additionally, new facilities do not need to be located near a graphite mine.
Anovion’s $800 million plant in Bainbridge, Georgia, and Novonix’s $160 million plant in Chattanooga, Tennessee, are examples of new synthetic graphite production operations in the United States that will benefit from these incentives, as well as those provided by the bipartisan Infrastructure Investment and Jobs Act.
Vianode, owned by Norsk Hydro, Elkem, and Altor Equity Partners, plans to build synthetic graphite facilities in Europe and North America, with enough capacity to supply up to 2 million EVs per year by 2030.
What makes Vianode’s proposition unique is that its production process is powered by renewable energy, resulting in a carbon footprint 90 percent lower than that of Chinese graphite refiners, according to Hans Erik Vatne, interim CEO/COO of Vianode and former Hydro executive. Vatne also highlights the benefits of synthetic graphite, such as faster charging and longer battery life.
Experts also note that synthetic graphite generally has higher purity and offers better and more predictable performance than natural graphite. Additionally, the price gap between the two has narrowed significantly, leading producers to blend even more synthetic material into their battery anodes, which still represent less than 10 percent of the cost of an EV battery cell.
Battery expert Bob Galyen explains that the growing demand for clean and consistent battery materials is a key driver for synthetic graphite. Galyen, founder of Galyen Energy and former CTO of China’s CATL, the largest EV battery maker in the world, believes that China will continue to dominate synthetic graphite production.
Despite the federal incentives, the construction of new synthetic graphite production facilities requires a significant investment. “The biggest challenge our industry faces is the amount of capital needed to make an impact on the supply chain,” says Burns from Novonix.
Researcher Fastmarkets predicts that China will remain the largest player in the synthetic graphite market, with production expected to grow from 1.6 million metric tons this year to 2 million metric tons in 2030.
“The truth is, China will dominate this market for the next 10 or 20 years,” says Burns. “The supply and demand balance will remain heavily skewed towards China for the remainder of this decade when it comes to North American options.”
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