【By Guan察者网, Ruan Jiaqi】

The Australian-based company Novonix focuses on the field of lithium-ion battery materials. As its headquarters moved to the United States, its large-scale artificial graphite production base in Chattanooga, Tennessee, which is being renovated, is viewed by the U.S. as an important milestone in building a domestic critical mineral supply chain and loosening China's dominant position.

According to a report by Nikkei Asia on the 26th, Novonix's Chattanooga facility has already installed several custom-built furnaces that are over 20 meters tall, with dozens more to be added in the future. The equipment already in use is being used to produce sample materials for key raw materials needed for electric vehicle and energy storage system batteries. Novonix plans to start mass production of battery anode materials next year, and its U.S. factory has become an important part of the U.S. strategy for critical mineral supply.

According to the report, Novonix will invest approximately $1.5 billion in the Chattanooga project, and once fully operational, the current team of 130 people will more than double in size. The company's CEO, Mike O'Kronley, revealed that the factory's maximum capacity is expected to be 20,000 tons of artificial graphite per year, accounting for about 10% of the global market share.

"We are at the forefront of this critical mineral crisis, and the U.S. government genuinely hopes to provide support and funding," O'Kronley claimed. "Therefore, we have become an important component of this strategy, and we are driving industry partners to advance the mission of mining and processing critical minerals in the United States."

However, compared to Novonix's optimism, Rich Goldberg, a senior advisor at the Washington-based think tank "Defense Democracy Foundation," frankly stated that he does not expect the U.S. to catch up with China in this field in the short term.

But he also pointed out that the U.S. can cooperate with allies or regions outside of China to obtain raw materials, and jointly provide parallel solutions for the midstream of the supply chain, even if it's just a temporary solution.

"As a country, we must meet some minimum requirements: ensuring a certain amount of raw material access, scaling up processing capabilities, and the ability to manufacture products such as magnets using these minerals," Goldberg added.

Novonix's U.S. factory Novonix official website

Graphite is the core material for the negative electrode (anode) of lithium batteries. An average electric vehicle battery pack requires 50 to 100 kilograms of graphite, twice the amount of lithium. Graphite can be obtained through natural mining or synthetic production, with artificial graphite accounting for about 80%, making it the mainstream choice. Currently, more than 90% of the mined graphite in the world comes from China, and Chinese battery companies also hold a "significant share" in the artificial graphite market.

According to Japanese media citing data from the International Energy Agency (IEA), in 2023, more than 85% of the global graphite supply came from China, with China's market share in battery-grade graphite reaching as high as 96%.

Industry executives pointed out that among lithium-ion battery raw materials, graphite is the most difficult to obtain from countries outside of China. The U.S. currently has no natural graphite mining operations, despite the presence of related reserves, but from an economic perspective, it is not feasible to mine them. O'Kronley told Japanese media, "Almost all battery manufacturers in the U.S. rely on importing graphite materials from China."

According to reports, to break through the supply bottleneck, Novonix uses patented technology to produce graphite from petroleum coke. By heating the raw materials to 5,400 degrees Celsius and other processes, highly pure, more stable and durable products can be produced, although the process is significantly more expensive. At the beginning of this month, Novonix terminated its cooperation agreement with the automotive manufacturer Stellantis due to differences in product specifications.

According to Japanese media, during President Biden's administration, Novonix had already received a $755 million loan, and planned to start construction of a second factory before the full operation of the Chattanooga factory in 2028. After Trump took office, including South Korean LG Energy Solutions, the company's shareholders again actively connected with the U.S. to align with the U.S. demand for critical minerals.

When asked whether the U.S. federal government would allow holding shares, O'Kronley said, "We are willing to discuss it." He also said, "Details determine success."

Graphite samples IC photo

Regarding the multiple tax and budget laws related to critical minerals introduced by the U.S. this year, Novonix also expressed its welcome: the new law stipulates that starting from 2030, companies that purchase critical minerals from China will gradually lose their eligibility for tax credits; the U.S. Department of Commerce also announced that it will impose anti-dumping duties on imported anode-grade graphite from China, and after combining with existing rates, the actual rate reaches as high as 160%. Novonix claims that these policies will stimulate domestic demand in the U.S. and promote the development of the critical mineral industry.

However, this tariff policy has caused many electric vehicle manufacturers to be upset. Earlier, the U.S. media Bloomberg pointed out that Tesla and its main battery supplier, Japan's Panasonic, tried to stop the ruling, stating that the U.S. domestic graphite industry lacks both quality and capacity to meet the needs, and the supply chain still relies on imports from China.

Electric vehicle manufacturers such as Tesla use refined graphite almost entirely from China. Sam Adham, head of the battery materials department at consulting firm CRU Group, bluntly stated that a 160% tariff would hit battery manufacturers hard.

"This is equivalent to adding $7 per kilowatt-hour cost for ordinary electric vehicle battery cells, basically wiping out the profits of South Korean battery manufacturers for one to two full quarters," he said.

This September, the Trump administration suddenly announced tariff exemptions for imported graphite. The U.S. side stated that this move aims to provide more flexibility for countries that have signed trade agreements with the U.S.

China has repeatedly responded, emphasizing that the essence of Sino-U.S. economic and trade cooperation is mutual benefit and win-win, and hopes that the U.S. will truly abide by market economy rules and maintain the healthy and stable development of Sino-U.S. economic and trade relations.

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Original: https://www.toutiao.com/article/7576923683860660770/

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