[Column] China's Graphite Control, Time for the 'K-Battery One Team' to Show Strength

Artificial Graphite, Natural Graphite Anode Materials [Image Source=Yonhap News]

"The government just needs to stop holding us back. The companies are doing well."

This is a somewhat self-deprecating remark made by a battery industry insider about the public-private joint 'Battery Alliance' formed last November by the government and battery companies, also known as the 'K-Battery One Team.' Domestic battery companies have been preparing for the energy transition era for 20 to 30 years. In contrast, the government has merely waited for companies to act without providing appropriate advanced industry support policies. Because of this context, the public-private joint 'Battery One Team' was emphasized, but the industry's expectations were not high.

The time has come to demonstrate the strength of the Battery One Team. The issue is China's graphite export controls. Starting next month, China will control the export of artificial graphite and natural graphite, the main raw materials for anode materials, which are key components of batteries. It is hard to believe that this move is not targeting the domestic battery industry, which depends on Chinese graphite for over 90% of its supply.

Worrying alone about export controls will not produce solutions. However, the very fact that another country can devise a strategy to manipulate the most vulnerable raw material supply chain in our battery industry is problematic. Uncertainty in the industry can affect the funding and cash flow of battery companies, which must handle massive investments. If a graphite supply shortage becomes a reality, production disruptions are also a concern.

Our economy has always faced external shocks and found answers each time. There are cases where the government overcame crises with timely responses. The 'Seoul Station Meeting' in the early days of COVID-19 is a representative example. On January 27, 2020, the Korea Disease Control and Prevention Agency (now the Korea Disease Control and Prevention Agency) held a meeting at Seoul Station with major diagnostic kit companies. At that time, the government proposed the development of reagents and kit products to companies and announced plans for emergency use authorization. Foreign media evaluated this meeting as a turning point that enabled South Korea to quickly establish a diagnostic system and respond effectively to the infectious disease in the early stages of COVID-19. Similarly, one month after Japan's semiconductor material export restrictions in 2019, the government accelerated the localization of semiconductor materials by supporting R&D with 240 billion won through supplementary budgets.

Although late, swift and certain responses are also needed for the graphite supply chain. There must be a concrete plan to minimize damage caused by export controls. In the long term, R&D support for refining and processing sectors of raw materials dominated by China, overseas resource development, and stronger incentives for raw material trade should be enhanced. Waiting idly will not lead to answers.

This content was produced with the assistance of AI translation services.