The global graphite market is valued at $24599.9 million in 2023, and it is projected to witness a CAGR of 7.4% during the forecast period (2020–2030). This is primarily attributed to the growing demand for graphite products in the metallurgy and electronics industries across the globe. Furthermore, graphite is widely consumed during the production of lithium-ion (Li-ion) batteries, which is likely to pave the way for the adoption of graphite in the automotive industry, which, in turn, will boost the global graphite industry.

Owing to the lockdown in various countries, the operations of various industries, including metallurgy and automotive, were temporarily halted or reduced, in order to curtail the spread of the disease. Since graphite is widely used in the production of various crucial components of automobiles and industrial machinery, the market for this material has been negatively affected by the pandemic.

The graphite market accounted for 2,892 kilo metric ton in 2020, and it is expected to register a CAGR of 5% during the forecast period, 2021-2026. The COVID-19 outbreak presented a challenging industry arena for the graphite market, as it slowed down the demand from the key end-user industries, like electronics, metallurgy, and automotive (including electric vehicles), owing to the lockdown measures of the COVID-19 pandemic. Furthermore, the production facilities of electronics parts were halted, owing to the logistics slowdown and unavailability of the workforce across the world.

Over the short term, the major factors driving the growth of the market studied include the augmenting demand from the burgeoning lithium-ion (Li-ion) battery industry and the rise in steel production in Asia and the Middle East. On the flip side, the development of substitute anode materials for lithium-ion batteries in high-end applications, stringent environmental regulations, and the impact of the COVID-19 outbreak are expected to hinder the growth of the market studied.

The growing usage of graphite in green technologies and the popularity of graphene are projected to offer opportunities for the manufacturers over the forecast period. The Asia-Pacific region is expected to dominate the market, and it is also likely to witness the highest CAGR during the forecast period.

Graphite is one of only two naturally occurring forms of pure carbon, the other being diamonds. Graphite occurs in a two dimensional, planar molecular structure whereas diamonds have a three dimensional crystal structure. Graphite generally occurs as flakes, which are multiple layers of graphene held together by weak bonds.  Graphene is a single, one atom thick layer of carbon atoms arranged in a “honeycomb” or “chicken wire” pattern.  It has been estimated that there are three million layers of graphene in a one millimeter thickness of graphite.  The delamination or exfoliation of graphite flakes is therefore one method of making graphene.

Graphite is formed naturally through the metamorphism of carbon rich materials in rock which leads to the formation of either crystalline flake graphite, fine grained amorphous graphite, or crystalline vein or lump graphite. Graphite is a non-metal but has many properties of metals.  It is an excellent conductor of heat and electricity and has the highest natural strength and stiffness of any material. It maintains its strength and stability to temperatures in excess of 3,600°C and is very resistant to chemical attack. At the same time it is one of the lightest of all reinforcing agents and has high natural lubricity.

Graphite Reserves Distribution

• Arunachal Pradesh: Holds the largest share of graphite reserves in India, with about 43% of the total graphite found in the country.
• Jammu and Kashmir: Follows with a significant portion of graphite reserves, accounting for about 37% of the country’s total.
• Other states with notable graphite reserves include Jharkhand (6%), Tamil Nadu (5%), and Odisha (3%)​​.

Graphite Production Concentration

• Tamil Nadu (37%), Jharkhand (30%), and Odisha (29%) are the states where most of the graphite production is concentrated​​.

Active Mining Centers

• Jharkhand: Notable districts for graphite mining include Latehar & Palamu.
• Odisha: Graphite mining is active in Bargarh, Nuapada, Rayagada & Balangir districts.
• Tamil Nadu: The districts of Madurai & Sivagangai are known for graphite mining​.

India’s Trade in 2022-23

1. During the year 2022-23, India’s export of Graphite, Explosives and Accessories is valued at USD 671.18 US$ which is 39% higher than the previous year. In April-October 2023 export of this sector stood at USD 406.96 Million.
2. The top 5 export destinations for India are USA, Egypt, Turkey, Saudi Arab & Mexico.

Graphite is a form of pure carbon that normally occurs as black crystal flakes and masses. Its unique physical and chemical properties make it well-suited to many industrial applications, including electronics, lubricants, metallurgy, and steelmaking. Global demand for natural graphite doubled between 2006 and 2012. Although Chinese industrial activity has slowed and led to prices falling from the high levels seen in 2011, consumption of smart electronic devices has caused a growth in demand and this may continue to grow as sales of electric and hybrid vehicles require larger batteries. China and India are the largest graphite producers, with over 80% of global production. Chinese graphite, however, is declining in quality while production costs are increasing. China has a 20% export duty on graphite, a 17% value added tax, and has instituted an export licensing system to ensure supply to its domestic economy, creating supply concerns for the rest of the world.

Graphite generally forms from high-grade metamorphism of organic matter in sediments. The three main types of commercially significant natural graphite are crystalline or disseminated flake, crystalline vein or lump, and microcrystalline or amorphous graphite. The largest flake graphite deposits are often relatively low grade. In contrast, vein graphite deposits are smaller and higher grade. Amorphous deposits can range in size but generally produce lower quality graphite with restricted uses. Recent exploration has focused on flake graphite in East Africa, Canada and Australia. The largest deposits are in Mozambique and Tanzania, an area noted for large, high purity flake graphite. This increased exploration activity has resulted in global inferred resources exceeding 800 Mt (USGS, 2015).

The value of graphite deposits depends on grade, purity, size and range of flakes or needles, and the presence of impurities that may have a negative effect on extraction. Pricing is complex and depends on total graphitic carbon (TGC) content; deposits with grades of over 80% TGC are economically viable.

The two main assay methods for measuring TGC are: LECO analysis and Double Loss of Ignition (DLOI). DLOI is normally used as a graphitic indicator, while the LECO method provides a more detailed assessment. DLOI may not always accurately represent the actual TGC values in the rock as the measurements can be affected by the presence of sulphides and calcite (carbonate). Processing flake graphite aims to optimise the liberation of flakes by size (Large: +180μm; Jumbo: +300μm; and Super Jumbo: +500μm flakes) and to maximize grade and recovery. Evaluating the economic potential of graphite samples requires an understanding of the extraction process. Over 80% of graphite demand is still driven by industrial applications. Predictions see the battery sector increasing market share over the next few years with a rebound in the steel industry having potential to also fuel demand.

In the 1990s China dumped graphite on the market to earn foreign exchange which caused a significant decline in prices. Much like rare earths, this essentially killed the industry in the west and graphite prices remained low until about 2005 due to excess production capacity in China.   Then the growth in China, the commodity super cycle and resultant demand from the steel industry caused graphite prices to increase until they reached record levels in 2012.   Shortages were reported.  Unfortunately for the graphite producers, high prices did not last long as a slowdown in the Chinese economy and declining steel demand quickly caused prices to fall back.  No new mines were built in the west during this period. 

Since that time prices have been sideways to down as the industry waits for steel demand to recover and for the lithium ion battery (“LiB”) market to get big enough to drive prices on its own as has happened with lithium and cobalt.  LiBs were not a factor with respect to demand in 2012 but have been growing at 20%pa due to the proliferation of handheld devices such as cell phones, camera, laptops, power tools, etc.  Electric vehicles and grid storage are huge markets which are still in their infancy.  LiBs already account for 25% of flake graphite demand and manufacturing plants under construction are expected to triple demand by 2021.  This will require flake graphite production to double in that period of time

Currently, China produces 70 to 80% of the world’s graphite and 100 per cent of the natural graphite used in LiBs.  Because of this dependence on China, as well as the importance of graphite to the economy, both the EU and the US have declared graphite a supply critical mineral.

The future direction of Chinese production will be a significant factor in determining where graphite prices go.  Traditionally, Shandong Province was the center of graphite mining in China but its production is declining due to the depletion of ore reserves and stricter enforcement of environmental regulations.  As Shandong was the main source of large and extra large flake graphite, production of these grades is also declining.  Mining has transitioned to Heilongjiang Province and it is now the major producer.  There are two main producing areas in Heilongjiang, Jixi/Mashan and Luobei, both of which produce mainly small flake.

The Jixi/Mashan region is the largest and is operating near full capacity.  There do not appear to be any new mines planned or under construction.  Luobei was principally built to serve the LiB market and is only operating at 30 per cent capacity.  For this reason, it is unlikely small flake prices will increase in the short term until the significant growth in EVs/LiBs consumes this excess capacity.

The market for large and XL flake graphite is much more robust, in part because of declining Shandong production but also because expandable graphite is the fastest growing market along with LiBs.  Expandable graphite is principally made from large/XL flake.  It is used in thermal management for consumer electronics and many industrial applications including heat and corrosion resistant gaskets and fire retardants.  The latter market is expected to grow rapidly as the use of brominated flame retardants is is phased out or banned.  Fuel cells and flow batteries are also new and potentially large markets for expandable graphite.  Also, the steel industry is a significant user of large flake and its recovery will put additional pressure on large flake prices.

Annual Chinese demand for expandable graphite is approximately 70,000 tonnes.  China only produces 25,000tpa of +50 mesh flake and the balance is made up of less desirable +80 mesh flake.  The demand for expandable graphite with very high expansion rates is growing even more rapidly and this requires +32 mesh flake graphite.  There is currently a shortage of both +50 mesh and +32 mesh material in China as there is in the rest of Asia as well as Europe.  China has now started to import +50 mesh concentrates from Madagascar.

In the short to medium term the graphite opportunity is clearly in the large/XL flake markets which are high price and high margin with supply shortages.  Longer term, new western sources of small flake production will be required to meet the expected growth in the EV/LiB markets and provide security of supply.