core sector communique

CHINESE GRAPHITE INDUSTRY LOBBIES GOVERNMENT TO IMPOSE TIGHTER CONTROLS ON MINERAL
________________________________________

Graphite producers out of China are calling for the government to afford the mineral the same protections as rare earths, a report by leading industry publication Industrial Minerals revealed last week.

China is the world’s largest producer of graphite, producing a million tonnes last year, accounting for 79% of global demand, studies by Industrial Minerals show.

"China has a stranglehold on natural graphite supply. This, together with a generation of under-investment in mines around the world, is creating a very tight supply situation," Simon Moores of Industrial Minerals, said.

Producers of the strategic mineral, which is used alongside lithium in batteries which power laptops, smartphones and electric vehicles, recently said that rising interest in the mineral has led to environmentally-dangerous practices and even smuggling. The price of graphite has increased by 140% since January last year – but rampant illegal mining has created a stable supply situation, producers warned. This means that if controls are imposed, prices could follow the same track as rare earths.

"The Chinese only impose graphite restrictions through VAT and an export tax. But their past policy on strategic raw materials is to severely limit them through a rare earth style quota scheme and redirect use into its domestic economy,” Moores said.

"Once the government realises the critical role of graphite in existing and new technologies, the situation is likely to become worse before it gets better," he added.

When China curbed exports in rare earths in 2010, of which it produces 96% of demand, prices of the strategic mineral rocketed.

This week Simon Moores, of Industrial Minerals, spoke to The Times about the possibility of China tightening its grip on the graphite market.  

Industrial Minerals provides the latest prices, news and analysis on the global supply and demand of non-metallic minerals and is releasing an in-depth report on the graphite market in April 2012.