India, Tanzania, and the United States all possess substantial graphite reserves. However, the challenge lies in availability and extraction and refining processes.
China dominates this industry because it can refine graphite at a fraction of the cost—only 9 cents compared to $1 in Canada. To produce 400 grams of highly refined 98.9% graphite, which is essential for EV batteries, six kilograms of raw graphite must undergo a fine thermal purification process. In China, this costs 4,100 Yuan, but the same process in Canada costs a minimum of 37,000 Yuan for a less refined output. This stark price disparity is due to China's unmatched capability to achieve 99.9% refined graphite quality.
For EV manufacturers, this means an additional $4,611 cost per vehicle when sourcing refined graphite outside of China. Selling 5,000 EVs under such circumstances would translate to $23 million in added expenses—money that could otherwise fuel consumer spending on leisure, dining, or personal goods. This unnecessary financial burden adds no intrinsic value to the supply chain.
India recently estimated that extracting lithium without Chinese equipment would require an investment of nearly ₹23,000 crore. Refining it domestically would cost an additional ₹10,000 crore, bringing the total to ₹33,000 crore. Given that returns would take at least a decade to materialize at a mere 3% annual yield—while inflation sits at 6%—India has chosen to forego this path. Instead, it has explored options in Argentina for lithium extraction, though refining would still require Chinese expertise.
The U.S., on the other hand, ceased domestic graphite extraction in 1997, focusing instead on lower-grade graphite for processors and computers. This has left the country without experienced workers in the field—those who were 18 years old in 1997 would now be 45 and out of practice for nearly three decades. Mobilizing the 1.5 million workers needed to match China's refining capacity within four years is unrealistic, especially considering China employs nearly 9 million people in metallurgy refining.
For the U.S. to compete, it would require significant investment in a domestic supply chain for refined metals—an effort that China has perfected over the past 20 years. Such an undertaking would cost billions and yield no profits for at least a decade. While long-term, consistent leadership like Trump's hypothetical 20-year tenure might make this feasible, shifting political landscapes and future leaders could derail these plans.
Alternatively, the U.S. could subsidize refining and processing in allied nations like India, but this would require billions of dollars in aid—a strategy unlikely to align with the policies of leaders who oppose foreign financial assistance.
The global graphite and lithium refining industries illustrate the critical role of cost efficiency and long-term planning in securing dominance in emerging markets like EV production. China’s decades-long investments have positioned it as the undisputed leader, while nations like the U.S. and India face daunting financial, logistical, and political challenges to compete. Without strategic partnerships or substantial subsidies, breaking this dependency on China appears unlikely. A coordinated, forward-thinking approach is essential if nations aim to challenge China's refining monopoly and establish sustainable supply chains.
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