By Divya Rajagopal
TORONTO (Reuters) – North American graphite miners are lobbying the U.S. government to impose a 25% tariff on three graphite products sourced from China to counter Beijing’s monopoly on a key material used in car batteries.
If the move is successful, it will pit the miners against their key customers: the Original Equipment Manufacturers (OEMs) and increase tensions with China, which controls the majority of critical metals used in the world’s electric vehicles and other engines. used.
The US government will decide in May whether graphite will be included in the list of minerals subject to the higher Section 301 rate.
The Section 301 tariff was introduced by former US President Donald Trump after his administration determined that China’s “acts, policies and practices regarding technology transfer, intellectual property and innovation are unreasonable and discriminatory.” Additional charges also apply to many other parts used in electric vehicles. China has called the US 301 tariffs on its imports ‘discriminatory’.
Graphite was exempted because China is responsible for 70% of global production of the material used to make electric battery anodes, the negatively charged part of the battery.
The graphite manufacturers rely on offtake agreements with automakers as a basis for raising capital from lenders, but if OEMs can obtain cheaper graphite from China, they do not have to sign these offtake agreements.
The OEM lobby group opposes the higher tariffs, saying that without a credible supply chain from North America, they are forced to rely on China, and that the tariffs make them uncompetitive against Chinese automakers.
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The United States Trade Representative, the agency responsible for imposing the levy, did not respond to a Reuters question about the inclusion of graphite from China in the Section 301 list.
Graphite miners told Reuters that allowing the free flow of graphite from China to North America will hurt their chances of raising capital, as automakers would shun future offtake deals if they could source cheap graphite from China.
“If we don’t secure project financing… we won’t be able to build a North American supply chain,” said Hugues Jacquemin, CEO of Montreal-based Northern Graphite.
Critical minerals such as lithium and graphite have become a flashpoint as Western countries seek to reduce their dependence on China for these metals that are key to the energy transition.
In October last year, Beijing imposed controls on graphite exports from the country to “better protect national security and interests.”
Japan, the United States, India and South Korea are the biggest buyers of China’s graphite, according to customs data.
“Trade protections should be put in place to blunt the effects of China’s ability to overproduce graphite and effectively control the global market,” said Erik Olson, spokesman for North American Graphite Alliance, a group of Canadian and American graphite producers.
