A fresh buzz around graphite is gaining traction in the markets as the United States and China butt heads again over the commodity - this time over price gouging.
A group of graphite producers - which includes ASX-listed synthetic graphite developer Novonix (ASX : NVX) - have banded together as the American Active Anode Material Producers (AAAMP) to petition the U.S. International Trade Commission to investigate price gouging of the critical mineral.
They want to slap on a 920% duty on exports from China as prices are seen to be below operating costs and investors are cautious that profit margins would be too weak to bankroll companies into production.
Graphite, listed as a critical mineral by most major nations, is a key ingredient in the production of lithium-ion batteries which are in high demand for the move towards cleaner energy.
While there are movements in the West to bring online new supply chain options for graphite, China still has a near 100% stranglehold on the production, refinement and distribution of the battery-grade material.
China’s already turned the screws on supplies, mainly to the West, by implementing export restrictions late last year, causing a scramble to find new sources of the metal.
So not only are supplies scarce, the economic viability to produce graphite is not there either.
The AAAMP agrees and says the pencil-metal coming out of China is being sold at less than fair value, stifling economic price points for the rest of the world’s graphite-focused business.
However, as Azzet reported earlier this week, the US government is backing companies such as Novonix to shore up domestic supplies to de-couple Chinese reliance.
Novonix has received a promise of $1.2bn to construct and produce synthetic graphite out of a facility in Tennessee which would see around 31,500 tonnes per annum flow into the U.S. market.
“The filing asserts China is harming the nascent domestic graphite industry by exporting artificially cheap battery-grade graphite into the U.S., denying North American producers a fair opportunity to enter the market,” the company said in a statement.
US stocks centre NASDAQ says if an investigation by the Trade Commission found that the Middle Kingdom was dumping graphite at artificially low prices, it could lead to the Trump administration imposing more tariffs on the country.
Syrah Resources (ASX: SYR) is also taking action, filing an anti-dumping and countervailing petition with the US Department of Commerce and the International Trade Commission through another lobby group, the North American Graphite Alliance.