SL should ink ‘mineral trade deal’ for exporting graphite to USA
Sri Lanka’s graphite is the best in the world and the country should move towards a ‘mineral trade agreement’ for exporting graphite, especially with US partners.
“This would be ideal for Sri Lanka to leverage the benefits from the US Inflation Reduction Act (IRA)” says International Policy Studies, subsequent to a survey done in the industry.
This study done by Dr Asanka Wijesinghe, Malisha Weerasinghe and Chaya Dissanayake and Rashmi Anupama underscores Sri Lanka’s comparative advantage in graphite exports despiteits currently modest output and relatively higher prices for vein graphite compared to China.
The global demand for Electric Vehicles (EVs) is projected to reach a staggering 80 million units by 2050, with the United States (US) alone expected to demand one million of these annually.“This rising global demand will lead to a hike in the need for natural and synthetic graphite. Considering the US imposing restrictions on Chinese imports, non-Chinese graphite suppliers, including Sri Lanka stand to gain.”
Professor Anura Wijayapala, an eminent electrical engineer from the University of Moratuwa and a former director of the Ceylon Electricity Board (2015-2017) pointed out that Sri Lanka’s strategic advantage lies in upstream value chain products (value-added products) within the EV market.The current graphite content of Sri Lanka is around 1.5 Mn tonnes, which is not adequate to meet the US demand. He stated that Sri Lanka could benefit from the high market prices for graphite by branding Sri Lankan graphite as better quality and produced through environmentally friendly and sustainable practices. Even with the IRA, Chinese electric cells will prevail in the global market. As the IPS study reveals, China dominates all the nodes in EV vehicle production.
CEO, Bogala Graphite PLC Amila Jayasinghe, shared that the current high prices of Sri Lankan graphite are due to the depth of the deposits in the few operational mines within the country. “Reducing the depth of operation to 10-20 m from the surface could considerably lower the cost of mining, which can be done by expanding mining operations to new mines, provided adequate regulations are in place.”
He however lamented that challenges such as the transparency of the process to obtain mining permissions from relevant authorities deter potential foreign investment. “The royalty fee for value-added graphite in Sri Lanka encourages the export of raw graphite to foreign anode producers as it is cheaper, which is not beneficial to the local producer.”
Deputy Director of Export Services at the Export Development Board of Sri Lanka (EDB), Akila de Zoysa, discussed government initiatives to link local manufacturers with global value chains, highlighting the potential of graphite value addition.
For example, graphene production, which is extracted from graphite, has a higher market value and demand.
“Grapheme production is costly and requires higher investments to develop into a profitable industry. However we are happy to note that a multinational company with Sri Lankan origins plans to launch an EV battery assembly plant in Sri Lankan partnership with a Swedish company.”
The EDB is exploring the possibility of connecting local graphite manufacturing companies with this corporation for the battery manufacturing process. Additionally, there are several local companies which are currently assembling EV vehicles with more than 35% value addition within the country. Sri Lankan graphite production is comparatively a green process.
“Certain other manufacturing industries in Sri Lanka are already making use of renewable energy to market their products to environmentally conscious buyers. “About 50 % of Sri Lanka’s electricity is renewable and the greenhouse gas emission in Sri Lanka is also comparatively low compared to many other countries which may help label Sri Lanka’s graphite as “green
graphite.”
Success for the Sri Lankan graphite industry hinges on competitive positioning, strategic international partnerships, and green manufacturing practices. As the electric vehicle market continues to expand, Sri Lanka’s graphite industry could indeed emerge as a key player in the global supply chain, provided it navigates the path with strategic foresight and innovation. (SS)
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