Assessing America’s Vulnerability to a Chinese Graphite Embargo

Published May 22, 2024

In an earlier article, I pointed out that China has a monopoly on the processed graphite used to make almost all lithium batteries.

Now, I am thinking about what might happen if China were to use that monopoly power to impose a graphite embargo on America. If we got into a big flap over Taiwan, for example.

I am not suggesting this is likely, just possible. In the military this is called a vulnerability assessment, and I have done a few. The potential impact is damaging enough to be worth thinking about, perhaps even doing something about. There are plausible scenarios where the damage to America is crippling.

Not that I am here doing a vulnerability assessment, as that would be a serious research project. Let’s just look at some basic issues that can get people started.

Anyone thinking such an embargo is impossible should look at the 1973 Arab oil embargo, which hit America pretty hard. I was there. Some features of that fiasco are likely to recur in a graphite embargo scenario, especially hoarding in reaction to short supply.

The basic idea is that the supply of new lithium batteries stops coming. How and how quickly this might happen when the processed graphite supply stops are two of the biggest research questions. This gets into how the embargo might be implemented. Given that a lot of our batteries are imported, it is not a matter of simply stopping graphite shipments to America.

On the impact side, it is amusing that there is already a lot of hand-wringing about how a graphite shortage might slow down the forced transition to electric vehicles. Since I oppose that forced transition, I would consider this impact a benefit.

The spearpoint of adverse impact is mobile communication, which is already fundamental to America. There is also a great deal of mobile computation, which we mostly take for granted. Things like email and web access.

So, let’s start with smartphones, which pretty much all use lithium batteries. According to Statistica, the number of smartphones bought each year is over a whopping 120 million. Estimated American users are around 300 million, so purchases equal 40% of the user population, which looks like a very high turnover rate.

Without graphite, this huge flow of essential battery-powered devices could quickly stop. Nor would there be new replacement batteries for the existing fleet of phones, which would cease working at some rate that needs to be estimated. Hoarding of existing batteries would hasten this chaos.

Statistica unwittingly puts the issue nicely. They say this: “Since the introduction of the smartphone, the device has played an increasingly important role in people’s lives, to the point that today, we could not imagine a day without it.”

Except we are imagining a day without it, in fact, many days for many people. A vulnerability analysis should try to say what the impact of such an unimaginable situation would look like. It would not be a pretty picture. That our economy would be crippled seems clear.

No doubt there are other essential uses of lithium batteries that need to be considered. Some interesting statistics are that roughly one-third of all battery sales are for mobile devices, one-third for “automotive” uses, and the last third for “industrial” uses. I have no idea what the industrial uses are or what fraction of these batteries are lithium. The possible military impact is especially critical because mobile communication is essential.

The potential damage from a Chinese monopoly graphite embargo is quite large. Vulnerability assessment is clearly called for.

Photo by W. Oelen. Creative Commons Attribution-Share Alike 3.0.