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Graphite pollution in China tied to battery demand from electric vehicles

Chinese authorities shutter mines to reduce pollution, raising concerns over supply security.

In an ironic twist to the green-car movement, China is reportedly shutting down graphite mines due to an increase in pollution from the material. The problem has been blamed in part on a surge in demand from electric vehicles, which use the material in their lithium-ion batteries.

Operations at more than 50 mines and processing facilities are said to have been halted in Shandong province due to environmental violations, causing "graphite rain" to fall from the sky and hydrochloric acid to be released untreated into waterways, according to a Bloomberg report.

Research from Monash University suggests all-electric cars contain an average of 110 lbs of graphite, while hybrids contain approximately 22 lbs. Smaller batteries used in cellphones, laptop computers and other electronics are also contributing to demand.

China's move has reportedly caused concerns over price surges as graphite demand is expected to skyrocket over the next decade. Analysts predict a five-percent rise in battery prices if graphite costs jump by 30 percent, potentially derailing the ongoing drop in battery prices.

Tesla Motors recently outlined plans to build a battery "gigafactory" that aims to double global lithium-ion battery output by 2020. The facility is central to the company's plans for a mass-market electric vehicle with a range of at least 200 miles, which would require battery prices to drop by at least 30 percent.

Some mining companies are reportedly planning to take advantage of the situation, which may help stabilize prices depending on output capacity. One mine in Australia -- shut down in the 1980s due to competition from China -- is expected to reopen this month, and others are likely to follow.

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