China has revealed plans to consolidate operations in the world’s most prolific flake graphite-producing region – the Heilongjiang province, where most of the world’s battery raw material comes from – that could significantly alter the global supply structure of the industry, UK-based analyst Industrial Minerals Data (IM Data) manager Simon Moores said on Thursday. China had officially announced plans to crack down on polluting flake graphite operations and start consolidation of the mines within the next 18 months.

This could be the biggest shift in graphite supply in a generation.

Moores noted that the supply and demand dynamics for flake graphite was finely balanced. The last time demand rebounded from a slump was in 2010/11 when prices rocketed to all-time highs off the back of limited supply and an unforeseen demand surge. At that time there were no real supply restrictions in place. “We could be entering a similar period for the industry now.

Demand has been low for the last 18 months, which has seen prices erode and capacity come off-stream around the world. We are yet to see any significant demand upturn, but should any rebound coincide with supply cuts in China then prices could once again increase significantly,” Moores said.