China yesterday boosted export controls on some categories of graphite, a key material in electric vehicle (EV) batteries, in a move that would “safeguard national security and interests.”
Some types of graphite deemed highly sensitive would be subject to so-called “dual-use item” export controls from Dec. 1, the Chinese Ministry of Commerce said in a statement.
Dual-use refers to applications that include the military.
Photo: Reuters
Beijing’s order came days after the administration of US President Joe Biden stepped up efforts to keep advanced chips out of China, a campaign that includes restricting the sale of processors designed specifically for the Chinese market.
US Ambassador to China Nicholas Burns said in an interview on Thursday that the US measures were needed to close loopholes.
The graphite items had been subject to a temporary export control order initiated in 2006, the ministry said.
At the same time, China said it would remove its temporary export controls on less-sensitive graphite categories used in the steel, metallurgy and chemical industries.
Graphite is an essential ingredient in EV battery anodes, a terminal inside a rechargeable cell. Battery makers can either use natural graphite extracted from mines to make anodes, or a synthetic material that is typically more expensive, but lasts longer, charges faster and improves safety.
China is a major source of the raw material, and also accounts for about 60 percent of natural graphite production capacity and 90 percent for the synthetic variety.
“This definitely will affect EV and batteries industry hard,” said Daniel Kollar, head of Automotive and Supply Chain at consultancy Intralink, referring to China’s dominance in producing the material. “It’ll also depend on how much pressure China wants to put on foreign industries.”
The ministry said that its measures are a normal adjustment that do not target any specific country or region, and that exports that comply with the regulations would be permitted.
James Lee, an analyst covering battery materials in Seoul at KB Securities Co, called the development “shocking.”
“China used its last, strongest card for negotiation with the US in terms of regulating the EV industry,” Lee said.
The US could now reciprocate with its own measures, such as restricting the use of Chinese batteries in vehicles produced by Tesla Inc, which operates a plant in Shanghai that accounts for more than half of the US company’s total output.
In August, China began restricting exports of gallium and germanium, two metals that are crucial for parts of the semiconductor, telecommunications and EV industries.
Exports resumed the following month.
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