From the Wall Street Journal, March 10:
The West got its hands on one of the world’s best graphite mines—then things started going off the rails
When mining executive Shaun Verner first visited his company’s graphite deposit in Mozambique in 2017, he felt sure he had a winner.
His goal: to challenge China’s dominance over the world’s supply of a critical mineral used in everything from electric vehicles to submarine hulls.
Backed by more than a hundred million dollars of U.S. government financing, Verner and his Australia-based company, Syrah Resources, opened the Mozambique mine and built a graphite-processing plant in Louisiana, the first of its type in the U.S. It also signed a sales deal with Tesla, which has historically bought graphite for car batteries from China.
Then things started going off the rails.
China, which provides more than 90% of the world’s battery-grade graphite supply, jacked up its production, flooding the market and driving prices so low that Syrah couldn’t mine profitably. Last May, the Biden administration delayed new rules that would have penalized U.S. users from buying Chinese graphite. In Mozambique, farmers resettled from Syrah’s mine staged protests, shutting down the mining.
Syrah’s Louisiana plant, now open for a year, has yet to make its first commercial sale. Syrah’s stock has plunged by around 90% since the start of 2023.
The company’s challenges help show why, in the David-versus-Goliath battle for the world’s critical minerals, China, the Goliath, keeps winning.
The U.S.’s desperate need for critical minerals—which include resources such as nickel, lithium and cobalt in addition to graphite—has been underscored by the Trump administration’s aggressive push for greater access in Ukraine and Greenland, rattling allies. In December, Beijing said it would ban certain mineral exports to the U.S. and conduct stricter reviews of graphite sales, in response to U.S. restrictions on semiconductor exports to China.
Yet with its thumb on many of the best resources, China can dictate prices. Washington’s policy flip-flops keep blowing up miners’ plans. And many Western mining companies struggle to navigate higher-risk countries where critical minerals—all needed for green technologies and national defense—are prevalent, leaving them flat-footed when unrest erupts.
Jervois Global, the only dedicated cobalt miner in the U.S., suspended operations in 2023, five months after local dignitaries attended the opening of its Idaho mine. The company, which received Pentagon funding, blamed surging Chinese cobalt production for pummeling prices. In January, Jervois declared bankruptcy.
BHP, one of the world’s top miners, shut down its Australian nickel operations last year, amid a deluge of Chinese production from Indonesia. Albemarle, the largest U.S. lithium producer, is cutting its workforce and delaying new processing facilities after a surge in Chinese lithium supply cratered prices.
There is considerable debate in mining circles over whether China is intentionally overproducing to put Western companies out of business. It is also possible Chinese companies are just trying to maximize production and earnings, since they can be profitable at lower prices than Western competitors.
China’s Foreign Ministry didn’t respond to a request for comment....
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