It is a mineral necessary for the production of batteries for electric cars. A recent study recommends trade agreements with the US taking advantage of the current geopolitical situation, but India has also shown interest in developing the industry, which boomed in the period between the two world wars. However, only 2,792 tons were exported in 2023.
Colombo () – France, India, China and the United States are attracted to the graphite deposits of Sri Lanka, where Canadian and Australian companies are already involved in the exploitation of the rich deposits. These countries are looking for an alternative to importing the mineral from China.
A study by the Sri Lanka Institute of Policy Studies (IPS) highlights the island country’s comparative advantage in exporting graphite, despite modest production and higher prices than in China. The study also recommends signing a free trade or mineral trade agreement with US partners in particular.
In fact, the spread of electric cars offers Sri Lanka a great opportunity to revive the graphite industry, which prospered during the two world wars with 35,000 tonnes of annual exports. Today it is estimated at 1.5 million tons, insufficient to meet US demand.
The newly formed Chamber of Mineral Exporters has stressed the importance of well-defined policies to harness the potential of Sri Lanka’s mining sector. Currently, the national production of graphite is 5 thousand tons, while, according to the Investment Council, the potential annual production capacity can reach 450 thousand tons. In fact, Sri Lanka can extract the best form of natural graphite in an environmentally friendly manner and should seize the opportunity to meet the global demand for “non-Chinese origin” graphite.
Academics Mahesha Hewapathirana and Asanka Dissanayaka explained to that “Sri Lanka extracts high-quality graphite that is distinguished by its remarkable purity, its impeccable crystalline structure and its strong electrical conductivity, suitable for various commercial uses.” However, in 2023 only 2,792 tons were exported, with a turnover of about 6 million dollars.
“Graphite is one of the main materials in lithium-ion batteries, essential for electric vehicles, which is why the United States Department of Energy classifies graphite as a critical mineral. Current forecasts indicate that global demand for “electric cars will rise to 40 million units in 2030. Ensuring the use of sustainable and reliable raw materials is a priority for the US, which seeks to diversify its mineral sources (cobalt, nickel, lithium, graphite) away from China.”
According to the Director General of the Geological and Mining Prospecting Bureau, Ranjith Premasiri, foreign investors with great interest in the industry include Indian and Chinese companies. Initial discussions have already been held with senior Indian Government officials to evaluate the possibility of expanding the graphite industry and collaborating on the development of exploration and extraction technologies, including the use of advanced techniques to reach deeper veins of graphite.
In the meantime, however, the mining industry faces several challenges, including the transparency of the process of obtaining mining permits from the competent authorities, which discourages foreign investment. The presence of a fee encourages the export of raw graphite instead of processed graphite because it is cheaper, a measure that does not benefit local producers.
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