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Howdy from Houston, and welcome again to Power Supply.
A narrative plug to begin: on this Large Learn, Jamie and I take a deep dive into the increase in offshore drilling. Firms will spend greater than $100bn plumbing the depths for oil this 12 months — the best stage since 2016.
I flew out to Shell’s new Vito platform within the Gulf of Mexico to see the deepwater renaissance firsthand. The business says its new mannequin for offshore drilling is cleaner, safer and extra environment friendly. New expertise is permitting it to drill deeper into the earth’s crust and pump oil from beforehand unreachable wells.
Environmentalists, in the meantime, are apprehensive about one other catastrophic spill much like the Deepwater Horizon catastrophe of 2010. In addition they say pumping billions of {dollars} into lengthy cycle oil manufacturing means locking in carbon emissions for many years to come back.
Elsewhere, Donald Trump is quickly constructing out his vitality crew, nominating oil boss Chris Wright to be his vitality secretary.
However the matter of as we speak’s publication is graphite. We take an unique have a look at a brand new facility opening in Malaysia, as international locations battle to compete with China for a vital battery materials.
Any ideas? You’ll be able to e-mail me at myles.mccormick@ft.com
Thanks for studying. — Myles
The scramble to tackle China in graphite
A brand new graphite facility will open in Malaysia as we speak — with a novel method to creating the battery materials — because the world scrambles to interrupt China’s stranglehold on the business.
Nasdaq-listed Graphjet Expertise is beginning up what it touts as the primary commercial-scale “inexperienced graphite” facility utilizing palm kernel shells to create an artificial model of a fabric through which China reigns supreme.
“China really dominates the entire world on graphite supplies,” stated Aiden Lee, chief government of Graphjet. “And graphite is such a vital uncooked materials for batteries.”
“China is so good that the authorities has spent a whole bunch of billions of {dollars} simply to fund their . . . government-linked firms to dominate the world.”
China produced the overwhelming majority of pure graphite and virtually 70 per cent of the world’s artificial graphite in 2022, in accordance with Benchmark Mineral Intelligence.
Final October Beijing imposed export controls on the fabric — because it has accomplished with a bunch of different battery minerals — in response to US restrictions on expertise gross sales to Chinese language firms. It now requires particular export permits for 3 grades of graphite.
Moreover, the US has imposed new guidelines to pressure producers to cease sourcing from China within the coming years simply as demand is predicted to soar.
That has turbocharged a scramble to provide graphite — used within the anode facet of lithium-ion batteries — in different components of the world.
However creating new provide chains, virtually from scratch, is just not straightforward. The chief government of Albemarle, the world’s largest lithium producer, warned final week that it was not economically viable to construct a western provide chain that might wrest management of vital minerals from China.
Thus far, a lot of the hassle to reshore battery supplies manufacturing has targeted on the cathode facet — together with growing western lithium manufacturing — whereas anode technology has obtained much less consideration.
“In North America and any a part of the [world] we are able to simply supply cathodes,” stated Lee. “However with out anodes you’ll be able to’t produce a superb battery.”
China’s rising export curbs have targeted minds — however the building of recent amenities is taking time. Graphjet argues its lack of reliance on conventional coking commodities, on account of its novel manufacturing technique, leaves it much less uncovered.
The brand new facility in Malaysia will produce 3,000 tonnes of graphite per 12 months, only a fraction of China’s huge 1.5mn tonne capability.
Graphjet plans to maneuver into the US, with plans to construct one other facility exterior Reno, Nevada, although it didn’t say when. It needs to provide 50-100,000 tonnes each year inside 5 years.
Shifting US coverage on clear vitality complicates issues, nevertheless. Donald Trump has vowed to intestine the Inflation Discount Act, President Joe Biden’s landmark local weather laws, when he takes workplace — together with tax credit designed to spice up the electrical automobile business.
However on the similar time the president-elect’s animosity in the direction of Beijing will in all probability encourage firms seeking to undercut reliance on China for battery supplies.
Lee stated he was unconcerned about any fast shifts in coverage — and hopes Tesla boss Elon Musk’s function throughout the administration will play an element in encouraging assist for uncooked materials industries akin to graphite.
“It doesn’t matter whether or not Democrats or Republicans take over the White Home, I believe the EV business nonetheless has to maneuver on,” he stated. “However it’s only a matter of timelines and the way fast the adjustments are — and the way are we going to mitigate the danger of commerce battle between the US and China.” (Myles McCormick)
Energy factors
Power Supply is written and edited by Jamie Smyth, Myles McCormick, Amanda Chu, Tom Wilson and Malcolm Moore, with assist from the FT’s international crew of reporters. Attain us at vitality.supply@ft.com and observe us on X at @FTEnergy. Make amends for previous editions of the publication right here.
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