China pushes graphite plans at advanced materials meeting
The Chinese news agency Xinhua sent out an intriguing, but short-on-detail, report this week. It quoted one E. Zhongqi, president of the Heilongjiang province division of the China Council for the Promotion of International Trade, saying that his northeastern province was looking to the expansion of the graphite industry to help trigger industrial revival. The province is being hard hit by the running down of coal mining.
He said the upcoming China Harbin International Economic and Trade Fair would bring “an excellent opportunity to promote the development of the graphite industry”. He added: “It (graphite) will play a vital role in the transformation of the coal cities.”
Zhongqi went on to say that a graphite-themed exhibition had been specifically set up during this year’s trade fair to connect potential business partners in China and Russia.
What the Xinhua report omitted to say – and this is rather crucial to knowing what is going on with graphite and China – is that being held in conjunction with the Harbin trade fair was the 4th China Advanced Materials Industry Fair, which gives the discussion of graphite a little more import. (Harbin is the capital of Heilongjiang province.) The combined fairs opened on Thursday this week.
What with all the rush to graphite in recent years by a welter of Western junior exploration companies, perhaps we have not been paying enough attention as to what is happening in the China graphite sector. After all, it is the major power, producing something like four times the amount of graphite each year as the runner-up, India.
And there was another sign of action with a report that the Provincial Ministry of Lands and Resources in Shaanxi province announcing it was pushing for moves into producing high quality specialty metals with a focus on graphite (my emphasis).
Alas, that is as much as I am able to tell you from news reports. We don’t seem to have much information available publicly. There have been developments in recent years; in 2014 plans were announced to replicate the mergers of producers that had taken place in the rare earths industry, and to close down small and polluting mines to help improve water and air quality. As Northern Graphite Corporation (TSXV:NGC | OTCQX: NGPHF) notes on its website:
China is very serious about these reforms as evidenced by the fact that in 2012 it invested $150 million to create Southern Graphite Ltd., a state owned amorphous graphite monopoly. The new company is consolidating 230 mines down to 20 which will reduce the country’s production capacity from 600,000tpa to 510,000tpa. Furthermore, in late 2013 the Chinese government closed 20% of its flake graphite production capacity for environmental reasons. In order to protect its industry and encourage value added processing at home, China has instituted a 20% export duty on graphite, as well as a 17% VAT, and an export licensing system.
It is also true that China is the top market: a new report from New York-based Persistence Market Research confirms China accounts for more than 70% of total graphite production in the world. According to China’s Twelfth Five Year Plan, the government plans to have five million battery-electric vehicles plying its roads by 2020.
Given the need for lithium-ion batteries, the boost in electric vehicles, mobiles, tablets, laptops, and cameras offers huge potential for the growth of Li-ion batteries, and in turn for the demand for graphite. Don’t forget Europe: it is the second largest graphite market in the world. Persistence adds that the growing use of carbon fibre instead of steel in the automotive and aerospace industries in Europe is is leading to increasing demand there for graphite.
It will pay to keep an eye on China’s graphite industry.
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