China’s Export Restrictions on Graphite Pose Risks to Korean Battery Makers

SEOUL, - China is placing export controls on graphite products, expanding on earlier curbs on gallium and magnesium exports. The decision raises concerns over potential disruptions in the global graphite supply chain, a crucial component in electric vehicle batteries.

According to a news release by Yonhap News Agency, the export restrictions aim to "ensure the security and stability of the global supply chain and industrial chain while better safeguarding national security and interests." The move is widely seen as a countermeasure to a U.S. decision on Oct. 18 to limit semiconductor exports to China.

The policy comes after previous criticisms aimed at China for restricting exports of gallium and germanium, key elements in advanced chip manufacturing. By adding graphite to the list of controlled exports, China is perceived to be "weaponizing" materials, which poses challenges to Korea and its enterprises. Korean firms, such as LG Energy Solution, SK On, and Samsung SDI, rely heavily on China for essential industrial minerals.

China dominates the global graphite market, accounting for 70% of total supply. The country also houses the world's four major anode producers, essential components in batteries. Korea's leading battery manufacturers import over half of their anode requirements from China, with POSCO Future M—world's fifth largest anode maker—sourcing nearly all its graphite from China.

Amid the escalating technological rivalry with the U.S., China is likely to extend export restrictions to other critical materials. According to the European Union, China controls the majority share in 33 out of 51 key materials, including 15 rare earth elements.

Despite having sufficient stockpiles for the immediate future, Korean battery companies face significant challenges in the mid-to-long term if they fail to prepare for possible material shortages. Diversifying supply channels is not a short-term solution, requiring collaboration between the government and businesses to persuade China and explore alternative sources in regions like Southeast Asia, Africa, and Latin America.

So far, progress has been limited on the government's pledge to reduce dependency on China for 30 key materials to 50% by 2030. As China and Korea fiercely compete in the global battery market, there is an increasing urgency for both government and enterprises to secure key materials and resources more proactively.

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