Graphite is the main material used in lithium-ion battery anodes, which are critical part of the batteries that power electric vehicles (EVs). While it doesn’t get the same attention as lithium, nickel or cobalt, it is fundamental to EV production, battery performance and critical minerals security. In fact, around 95% of a typical EV battery anodes are graphite-based.

Despite its importance, graphite has remained in the background of the energy transition discussion. Today though, the scale of future demand is hard to ignore. In April 2026, the British Chambers of Commerce's Delivering Growth: Resilient Global Supply Chains report ranked graphite second out of 21 critical minerals and estimated that supply would need to increase by 4,851% by 2035 to meet industrial demand.

So, if graphite demand is rising, why have prices remained subdued? Also, why are so many graphite miners struggling to create shareholder value?

Why graphite pricing is currently weak

Demand is growing rapidly, but short-term supply growth has been even stronger. This is putting pressure on prices and leaving many projects exposed to weaker investment returns.

According to the International Energy Agency's Global Energy Review 2026, graphite oversupply across the value chain is putting continued downward pressure on prices. Much of the additional supply has come from synthetic graphite production, which increased by 22% in 2025. At the same time, natural spherical graphite supply declined by 3%.

There is one part of the puzzle that is much more interesting though. That is China's position within the graphite supply chain, particularly in battery-grade processing.

Why does China dominate the graphite supply chain?

China’s advantage in graphite goes well beyond mining. As well as producing around 77% of the global graphite mining output, it also dominates the processing required to turn graphite into battery-grade material. The country controls roughly 95% of battery-grade processing capacity, giving it significant influence over the EV battery supply chain.

A similar pattern exists across other critical minerals. China controls around 60% of global lithium processing capacity and has a similarly dominant position in cobalt refining. Although around three-quarters of cobalt production originates in the Democratic Republic of Congo, a comparable proportion of refining capacity is controlled by Chinese operators or state-backed investments.

This is important because a graphite project does not become strategically valuable just because it can extract ore. The challenge is producing battery-grade material at scale, reliably and at a cost that can compete with established Chinese supply.

Investors have become increasingly selective, looking beyond resource size and grade. Instead, the focus is moving towards projects that show a credible route to production as well as competitive operating costs and secure end customers.

While many projects across Africa, Canada and Australia can produce graphite concentrate, a far smaller number can demonstrate a viable downstream processing strategy. Building and operating processing facilities requires large amounts of capital, specialist expertise and years of technical development.

What does this mean for UK government policy?

Governments in the UK, EU and US have all identified critical minerals as a strategic priority. Reducing dependence on concentrated supply chains has now become a common policy objective to counter rising geopolitical tensions and energy security concerns. Translating that ambition into reality, however, is proving difficult.

Developing alternative mining and processing capacity outside China requires substantial long-term investment and a willingness to accept higher costs. Even then, competing with an established and highly integrated Chinese supply chain will not be straightforward.

It is unrealistic to assume that graphite security can be achieved through the creation of parallel supply chains alone. A more practical approach could be combining selective investments, strategic partnerships and closer political and commercial alignment between consuming and producing countries. For graphite, security of supply could be as much a geopolitical challenge as a mining one.

How we can help your mining and metals business

We work with a wide variety of clients in the mining and metals sector across the UK and globally, with our expertise spanning:

• Global network/capabilities, including audit and tax.
• Global mobility support and tax incentives.
• Advice on systems compliance with UK and wider regulations.
• Corporate governance, including ESG.
• Capital markets transactions.
• Model audit and due diligence assignments.

If you would like to discuss the impact for your mining and metals business, please contact Graham Ricketts.

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