As a graphite company, Semco pays a lot of attention to trends in graphite manufacturing. Of great interest to any company in the graphite field is the expected ramp up of electric vehicle production both domestically and internationally. The fastest growing car company in the world exclusively makes electric cars (do we need to say who it is?), and most major auto manufacturers have plans to transform their petrol-burning fleets to electric vehicles. When they begin putting those plans into action (as many already have--see the new electric Ford F-150s, for example), the need for battery components will ramp up, too. All those batteries require important graphite components - graphite anodes. To meet the needs of this massive transition away from fossil-fuel and carbon-emitting vehicles to all-electric ones, battery production is expected to grow each year by 25% over the next decade. Demand for graphite components will follow. The expectation is that graphite will be a highly prized commodity for years to come. The US, while increasing its graphite production during the last few years, still produces just a tiny fraction of the graphite that China produces. In fact, there are virtually no graphite manufacturing facilities of size outside China. As the battery production sector is mostly controlled by China, with a market share of over 80%, it is expected that the Chinese government will restrict exports of graphite, favoring its domestic needs.
The US government has allocated large amounts of funds to be applied in aiding green technologies, especially electric vehicles. The paradox is that some of the raw materials and technologies needed to propel the green revolution are quite polluting. The US thus abandoned the production of these materials and technologies in the late 70’s and 80’s in favor of importing them from China. Now the right balance will have to be achieved for the US to regain some of the domestic manufacturing in critical materials without affecting the effort to green the economy.
Regardless of what happens in the US, it will be years until some of the supply chain issues we are currently experiencing will be alleviated by new capacity being created here domestically. In the meantime, graphite companies and any company doing graphite manufacturing will be trying to buy as much graphite as is available.
If the pandemic had a positive effect on domestic graphite manufacturing, it has been to highlight big issues plaguing a supply chain that is overly dependent on China. The domestic graphite manufacturing sector recognized this problem, and capital is being allocated to mitigate it. Investments in US graphite companies are on the rise, and there is hope in the graphite manufacturing sector that a day will come when we are not reliant on purchasing all raw material from China. As mentioned above, though, the results of these investments will not be felt for years. In the meantime, makers of graphite components, like Semco, are left to navigate a challenging supply landscape.