Going green: Environmental challenge of the graphite industry in China may have impact on the market – the point of view expressed by market players in the article published by Industrial Minerals in mid-October.
As part of a series looking at the darker side of battery mineral production, the US newspaper ran a piece entitled 'In your phone, in their air', investigating issues of pollution in China’s graphite industry.
The Post visited various Chinese villages and spoke to locals affected by pollution from graphite extraction and followed the supply chain from the mines in question to well-known battery and technology companies.
With China accounting for 67% of the global natural graphite production 2015 the country dominates the sector, according to IM’s latest Graphite Market Outlook to 2021 report. And as discussed by IM last year, the issue of pollution in its graphite industry is nothing new.
"We know what is going on [in China] and, [in some cases,] it is even worse than what is described in the article."
Shishir Poddar, managing director at Tirupati Carbon and Chemicals, agreed: "Pollution has always been a concern with Chinese mines, as the production methods used in the mines are still primitive and little efforts have been made to upgrade these."
Stephen Riddle, of US-based Asbury Carbons, told IM that improvements have been seen in the industry and should not be ignored.
"China has come a long way in their graphite. I don’t think it is a given [that pollution is rife] (…) of course you can go to back-end mines and find problems," he told IM.
"My point of view is that the graphite industry is not as dirty for the environment compared to most mining industries."
Riddle outlined three areas where graphite production may cause pollution.
The tailings pond, where water is pumped, is bound to contain small volumes of oil – kerosene or pine oil – used in the floatation process and graphite particles – "no one gets a 100% yield".
If this pond floods over, it can cause damage to the local environment.
Secondly, in the drying, screening and bagging process, volumes of low-density material are released into the air, to varying degrees depending on how effective the dust recovery process is.
Finally, further downstream, when graphite is sphericalised or shaped for battery usage, it goes through a process of chemical purification which uses heavy acids. "If those acids spill into rivers, you’ve got a problem," said Riddle.
He maintained it was not a case of regulation being bypassed in China for the sake of low-cost production, rather that it was due to capital and operational costs generally being a lot lower there.
Capital expenditure can be as low as $2m, versus $30-40m in other parts of the world, while in terms of operational costs, labour costs pale in comparison, even to those in Africa.
Both Riddle and Luh agreed that the exposure received by the Chinese industry was unlikely to have any major impact on the sector itself.
"I don’t think this will have a kickback," said Luh, noting that companies would continue to buy cheaply-sourced material, regardless of environmental issues.
Riddle argued that graphite is a relatively minor concern for most big technology companies, compared with other materials they have to source.
"If I’m working for Apple, graphite is at the lower end of environmental issues compared to rare earths and other metals (…) If I wanted to be the greenest company I would take them all out," he said.
However Poddar suggested that while pollution concerns were unlikely to have any near-term impact, as the pressure for environmental-friendly mining methods builds there is some potential for supply disruptions in the future.
Similarly, Stan Litvinyuk of Zavalievsky Graphite Ltd. said he was glad that environmental concerns were increasing "as this will make the overall situation much better for the graphite manufacturers elsewhere".
Meanwhile, the price of graphite remains low.
Luh does not believe prices can fall much further as they are now close to costs. For his part, Riddle intimated they were not going to improve any time soon, however, and that a further drop off remained possible.
Despite talk about consolidation in Chinese graphite – a phenomenon which might allow prices to pick up again – going back a number of years, to date little progress has been made.
"There’s more talk from Westerners than in China (…) there’s more talk about it in steel, with no big push in graphite," said Riddle.
Zavalievsky Graphite Ltd. is the largest manufacturer of natural flake graphite in Eastern Europe. Zavalievsky Graphite Ltd. is receptive to calls of such expert publishers as WP and IM for paying attention to the environmental challenges in graphite industry and sources of origin of graphite.
This information can turn attention to the environmental price of cheap raw materials and also have positive impact on graphite market.
If the Chinese government pays attention to these environmental challenges, it can lead to an increase in world prices for graphite and possible market reallocation. And also can lead to the retrieval of boom conditions of 2011-2012.
Zavalievsky Graphite Ltd. as a single factory in a town has working partnership with environmental control services and local community.
Also Zavalievsky Graphite Ltd. is keeping ahead of local environmental requirements developing new technologies those are more eco-friendly.
P.S. Zavalievsky Graphite’s management group appreciates IM and business associates mentioned in above article expressing similar principles concerning the issues of raw materials origin.