India eyes Sri Lanka’s graphite mining industry

While graphite in its raw form is used in the manufacture of electric vehicle (EV) batteries globally, Sri Lanka’s graphite has a huge potential to export to countries that manufacture EVs. Last year, the US alone manufactured one million EVs while 85 million EVs were rolled out globally.

In 2019, Sri Lanka was the 11th largest supplier to the world with exports worth US$ 4.6 million and 2570 metric tons in volume accounting for only 0.9 per cent of the world market share.

The Institute of Policy Studies (IPS) last Tuesday launched a report titled ‘Trade wars in electric vehicle supply chains: A win for Sri Lanka’s graphite industry’. Stakeholders in the industry were present at the launch and stressed that there are only two graphite mines in Sri Lanka and the supply is not enough to meet the demand. India is showing interest in setting up graphite mines in Sri Lanka as the demand for raw graphite is increasing globally in the manufacture of EV batteries.

The report highlights that Sri Lanka has a comparative advantage in exporting graphite whereas the current volume is low and the price is relatively high in the key markets. Market share is going down where cheap producers are major competitors. The discriminatory industrial policy of the US puts Sri Lanka in an advantageous position. Mozambique, Madagascar and Sri Lanka are the major non-China suppliers.

The study also underscores that Sri Lanka’s most promising opportunities lie in the upstream segment, particularly in the mining and processing of graphite into battery-grade material. Leveraging its growing trade relationships with ASEAN nations and exploring mineral trade agreements with the US, Sri Lanka can attract investments to further boost its mining sector.

While acknowledging the challenges posed by the US green industrial policy, the study recommends strategic measures for Sri Lanka, including value addition through anode production and investment in research and development initiatives. Establishing battery testing laboratories for local university researchers will enhance the country’s technical expertise in EV battery component manufacturing, creating high-quality job opportunities within the sector.