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China has imposed export controls on graphite, a material used in electric-vehicle batteries, as Beijing hits back at US-led restrictions on technology sales to Chinese companies.
China, which dominates global supply chains for the mineral, will require special export permits for three grades of graphite, the Ministry of Commerce and the General Administration of Customs said on Friday.
The new export controls, which China said were introduced on “national security” grounds, are set to escalate geopolitical tension between Beijing and Washington over tech supply chains. They also underline China’s dominance of global supplies of dozens of critical resources.
China is the leading producer of graphite, accounting for about 65 per cent of supplies in 2022, according to the US Geological Survey’s 2023 annual report on the mineral.
The country’s market share in some finished graphite products is closer to 100 per cent, according to the Institute for Energy Research, a Washington-based research group.
The move comes days after US president Joe Biden’s administration tightened controls on exports of cutting-edge artificial intelligence chips to China.
Beijing has criticised Washington for the controls. The Chinese commerce ministry on Wednesday said the “US constantly overstretches the concept of national security, abuses export control measures and turns to unilateral bullying acts, which China is strongly dissatisfied with and firmly objects to”.
While Chinese officials are wary of retaliation that could damage China’s own companies, Beijing in recent months has started to leverage its dominance over a vast array of materials and resources in response.
In July Beijing put similar restrictions on gallium and germanium, metals used in a number of strategic industries including electric vehicles, microchips and some military weapons systems. The government also cited national security concerns.
The controls require companies to obtain additional permits, which does not equate to a ban but creates uncertainty for industries dependent on the Chinese products. The germanium and gallium controls have yet to cause significant disruptions for non-Chinese buyers.
Graphite is the most common material used in the anode side of lithium-ion batteries because of its relatively low cost, high energy density and stable structure. The anode side of a battery releases electrons during discharge.
Ross Gregory, a Seoul-based partner at consultancy New Electric Partners, said any ban on anode materials would be “incredibly significant”.
“The whole of the car battery industry is dependent on anodes, and they nearly all come out of China,” he said. “It’s not that the rest of the world can’t catch up, they can, but it won’t happen overnight.”
Hong Kong-listed shares of China Graphite Group gained 10.7 per cent on Friday following the announcement.
Additional reporting by Harry Dempsey in London and Will Lawrence-Brown in Hong Kong
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