ITC Reversal & The New US Anode Playbook | Erik Olson & Ben Steinberg

Welcome to Graphite Hubs, into your series. A series dedicated to all things Graphite. Now today I'm joined by Eric Olson, president of Venn Strategies and Spokesperson for the North American Graphite Alliance, and Ben Steinberg, principal at Venn Strategies and president of the battery materials and technology coalition. So thanks for joining me both. - Thanks, Harry. - Thank you. Now I had hoped would be sitting down to discuss a favorable outcome of the anti-domping and countervailing duty case against the Chinese active endometarial, which was the combination of many, many years worth of work. And we were looking at combined duties north of 160%. But unfortunately the ITC's negative determination means that that's not the conversation we're having today. So clearly disappointing outcome and also unexpected, which you might just walking us through what happened. - Sure. I'll start and Ben, you know, feel free to jump in if I miss anything. I mean, as we've discussed before, Harry, you know, this is a accumulation of years of work the North American Graphite Alliance has been together for a little over three and a half years, but the BMTC's, you know, almost six years old. And we've been working with Graphite Companies for a long time on policy solutions in DC. And we've been working with these Graphite Company specifically, you know, when it relates to trade matters, you know, our first focus was on 301, you know, the original 301 studies that the first Trump administration undertook eight years ago. They put, you know, that they had Graphite in there, they had it tariff, and then there was exemptions that were granted because Tesla, Panasonic, and others had requested that. So this is an ongoing issue for a long time and we started working with these Graphite Companies to remove that exemption, which we're successful in. And that led to the trade case, inevitably led to the trade case and talking about ADCBD tariffs. We obviously were very disappointed as you noted with the outcome, what happened? It's a closed door vote. I will tell you, it was a very unusual vote. Our trade council who's been doing trade cases for 30 years and his team have seen a lot of ITC cases over time and what usually happens is the commissioner's vote. There's only three commissioners currently at the ITC. The votes get posted, they put out a press release and then we have, you know, the sort of the summary decision come out. What happened this time was the commissioners came out. There was a three zero vote in our favor and then 20 minutes later the vote was changed at the two one against us, which was very unusual. Again, our trade council had never seen that happen. It feels a little funny. We're trying to figure out what, you know, the why behind it, but the practical implications are, the ITC decided that, you know, the foundation of our case that, you know, that the industry is being materially recorded was not true and therefore the tariffs were not going to be put in place or formalized for the next five years. You know, the Department of Commerce had already done their work and the ITC's job is just to affirm what the ITC had reviewed and they decided, you know, that they didn't agree with their colleague that the Department of Commerce, who did, as you noted, found tariffs and dumping and counter-substitulation, which is counter-bailing duty. So that's the short synopsis. Happy to get more into it, but that's, you know, that's what happened a few weeks ago and we're still trying to unravel a little bit like why the sort of funny decision and how it played out that way and, you know, we're reaching out to colleagues inside the White House and other departments to find out why. But again, the point is there's no tariffs now at this point, at least as a result of this case. There's tariffs because of 122 tariffs that the President's been in place and the exemption has still gone for three or one tariffs as it relates to the first administration, three or one tariffs against China. - This would have been less surprising. If commerce hadn't done their year and a half worth of work on to China, gone into factories, talk to all the companies, came out with their decision for dumping, which preliminarily was a lot higher and had batteries in scope of the preliminary decision and then that was taken out and then the tariffs got reduced down to around 160%. If all that wasn't written up, I might say, okay, this is gonna be tough, but the case law is there or all the work that the agency had done was there to sort of point in favor of the tariffs. And the implications are right now for the time being that Chinese graphites they's cheap in the US market. It weakens the case for domestic graphite and anode production and it undercuts this administration broader US policy goals around supply chain independence. So we are quite disappointed with the outcome, but as we'll get into there are other tools in the toolkit for this industry to use and keep the fight going. - And would you be able to clarify whether the commission's final reasoning is centered specifically on material retardation of an Eastern US industry rather than material injury. I think I know it should be later this month, we are gonna see some more information come out on that. So I'm not sure what detail you can speak to that at the stage. - Yeah, you're in an LNH. We're a little light on detail. I mean, they came out with like a two-pageer that they disagreed with the material retardation piece, but it's really, it's April 20th, I'm looking at my calendar, April 26th. It's a deadline for them to have their formal written comments, which will be the voluminous in their oratory there. And so we'll be able to dive into that and sort of see what the exact reasoning is. And that leads to questions like Ben was saying, there are other tools, but there's also options for the industry. They can appeal to the Court of International Trade. They could refile the case and change the scope. And so we haven't made any of those determinations. There's no decision on that front, but those are some of the options, but it's hard to make decisions until you see exactly what the commissioners are writing and what their focus area is for the decisions that they made. - I think in case law, I'm in Eric, you're more of an expert than I am in this space, but material retardation is the third part of the ADCV law and it's less used and it's harder to prove. And so there potentially is a little bit of just, for the commissioners to go through and get proof on the material retardation, they have to feel that there is a lot of proof on that end. And so we believe we've made the case and that it's very clear given the long history of these businesses interacting from the supply chain to the downstream to the OEMs, but that's a part of the case law and part of the history of the ADCV law that is there's less out there. - And then how hard is it to predict an industry such as the act of antimaterials on something that hasn't yet reached meaningful commercial scale? - That's a big question. I mean, it's hard. I mean, as Ben noted, this is the little used law, the material retardation portion of the ADCV law. You know, I think tungsten won a case last year framed on that and before that it was like 2017. I think it was steel beer cakes. And you know, the US has a lot of the industries that we want and have built a lot of the worldwide industries. And so it's hard to frame a case in the, we don't have it, but we want it. And we can't have it because another country's interfering. So it just doesn't happen often that those set of circumstances line up. I think when it comes to the battery supply chain or material minerals or rare earths, we have a good, you know, like to stand on because we, you know, the US has a deep interest in having, you know, viable industries and those sectors for not only national security but economic security for grid build out for AI data that's in our bill. I mean, there's a lot of reasons why we need those industries here. But, you know, China has had a 10, 20 year head start and has really developed and, as we've discussed before, Harry, you know, owns these industries, especially when it comes to graphite and active and own materials. So it's hard to build these industries up and it's such an unusual piece of case law and rarely used that I think that could have been something that tripped us up a little bit. But as far as the answer to the question, you know, is it difficult? Yes, it's difficult when you have such a dominant country that is willing to invest state resources to ensure supremacy in owning different critical material markets. So it's going to be difficult. And we've already seen it, you know, immediately after the, you know, graphite was hovering around $15,000 with the 160% duties in place. US graphite was selling at like $8,500. And then as soon as the trade case, the vote came down and we lost. Chinese graphite started coming in at $7,500. It was something from benchmark. So I think it's metric tons or something. So like immediately we saw the price differential and that's going to have immediate impacts on this industry and the potential for growth. So it's hard. And as Ben noted, there's other things we can do and we're in a lot of different active conversations around that and happy to get into it, whether it's trade or pricing or support Ben said it earlier, there's still the ventures from this administration to have this industry. here. It's just a question of how do we support it to make sure that it flourishes? It's a it's a hard pill to swallow when you've been in this industry so long. You have a resource base here in North America in the US. Synthetic graphite is made from petroleum, coke, and pitch. And we can do that here. And we have the capabilities and the know how and the resource for for the industry to say, you know, on the receiving end of that that they don't have the time effort. It's it's too it takes too long. These companies aren't coming along for that amount of time when so much focus is on this sector. I find it hard to believe that that material retardation does not work in this instance. I know we can't dwell now too much on the past that comments happen. So if we look ahead, what what is the strategy now? You know, we look at section two, three, two, section three, oh one. Where do we go from here? Yeah, I think, look, I don't want to give away, you know, the internal conversations obviously with our companies, but those are options on the table and and that's, you know, naturally where we're going to have conversations with the administration. You know, I think the wide ranging three oh one studies at the administration is undertaking right now. You know, comments are due next Wednesday, the 15th, Naga and BMTC will be submitting comments. I think then we'll probably end up testifying at the hearings that will take place later in April and early May. So we'll be able to be a little more public about our positions here soon. We're still having internal conversations, but obviously, that's naturally a place to go. If you, you know, the administration's going to look at 60 different countries to put tariffs on with 301s, that opens a pretty large plane field of opportunity to look at other countries other than just China where production could be happening for a wide variety of materials, including graphite. So I think that's, that's the first deadline. The 232, you know, the administration has sort of held on to the critical minerals 232 and right now they've instructed us to look at pricing mechanisms to support certain industries. So we're involved in that conversation as well. But I think that's going to be something that comes out maybe in the summer or later, but that's the act of conversation that I've earned in the middle of. I don't know, then if you want to dive into that piece a little bit more and what the conversations have been with the administration of that front. I just, I mean, broadly on on trade 301s, 301s and 2302s offer a broader sort of net to capture unfair trading practices and national security issues around this industry. So in a way, it may be a little bit better fit and a more holistic fit to supporting the domestic industry. You know, the industry from China is shifting into Indonesia. We have BTR Indonesia where a 301 could target or a 232 could target Indonesian graphite. It could target Moroccan graphite. It could go elsewhere and be a little bit more of a like I said, a larger net. I think that's just interesting and it has a broader, it's less limited in the way that you need to find harm either from retardation or injury. So I think we are in a good place there. Obviously, when Eric started the conversation, he talked about how there were exemptions put in place in graphite. We had that on the clean vehicle tax credit where they had a two year exemption period on graphite. So this is wherever we go there they are or there we are. So we are going to end up in that situation again with the industry who is dragging their feet on on helping support the standup of this industry here. But you know, that is where we're headed. On pricing, I think that's a really exciting thing that started probably five, six years ago and now this administration has put it together formally in their forage program where they're going to be signing mineral agreements. As Eric was talking about with countries around the world and setting a minimum price for a commodity. Graphite included, it's a critical mineral. And if you come in at lower level pricing from what that commodity is or what that mineral is, you get tariffed at the border. So that's what they're trying to do. They're trying to ring fence critical minerals with certain countries and get other countries to sign in. So you create this ring around those who are who are artificially subsidizing or harming industries. And so that's in its infancy, but they've gotten certain countries to sign on so far and they're in the process of working how to set up that pricing benchmark, which is a really interesting exercise. And a DARPA has been working on it with the critical minerals forum. There's other EIA is starting to look into this. IEA is looking into this. So there are entities they're working on the pricing piece right now. And you you touch there on VTR Indonesia. I think that's a common question I get asked around what impact with this case and these duties have had on them. Are you able to speak to that at all? I mean, obviously, you know, VTR was going to be hit, you know, with the same tariff, I think, given their ability has been already noted to move out of country. I think we would have seen, you know, a rapid expansion out of China because they would have found ways to, you know, move production to avoid the tariffs, which, you know, is a common Chinese practice. You know, I've been doing this for a couple decades now and, you know, worked on different cases and paper and rail and other things. And we've seen, you know, that's a China common practice for the Chinese is to move production somewhere else. And so I think that's what we'd have seen that really jumpstart that process even more. I mean, it's already started. It has been noted, you know, there are another jurisdictions and moving there. But I think we would have seen rapid deployment. And then we would have had a question for our group if we had one of, do we file a new case, do we need a file case, you know, an Indonesia and somewhere else? I think that's what the result would have been because they would have wanted, obviously, naturally, you want to avoid the tariff. Yeah, they already have plans to go from 80,000 tons per year to 160,000 tons per year in Indonesia, BTR. The reason for that is so that industry can buy from a non-FEOC country. Interestingly, BTR is listed as a FEOC, a foreign entity of concerned by Department of Energy. I believe, Department of Commerce has come to the same conclusion. I think while the case wouldn't cover it, the EDCVD case to Erics Point, that's where a lot of focus is going to be in attention on trade related to graphite as the expansion goes outside of China. And one of the other things that I'm trying to get a read on is whether the current administration is engaged at a senior level on graphite or is it still flying under the radar? So since the outcome came out a few weeks ago, have you had any indications on how the administration views the outcome? Go for it Ben. I don't want to speak for the the administration. I think, you know, the thing the government is most focused on are bespoke critical minerals like the niche rare earth elements that are very small markets that are used for tech, a lot of which goes into the defense industrial base. So that's their first target is to ensure that they have access to those things. Beyond that, I think one of the main focuses, Eric and I have in Washington is to ensure that graphite and other battery materials get that second tier focus. And not only that, that they actually have healthy markets in the United States and in allied countries to sell the products into anodes into battery cells or graphite into the nuclear chips industry. So, you know, we have gotten good reception from the administration and attention where they fall on the trade case. We can't speak for them on that, but we do expect that, you know, with incoming opportunities around through ones to 32s pricing support project vault other things that the administration has has put in place or will be putting in place that they're going to be focused on graphite. Okay, now it sounds like there's a lot in the toolkit that the government can look at introducing to support the industry, but it feels like some of these companies in the graphite space can't be waiting around another say two or three years for some of these policy mechanisms to be implemented. So, what policies do you think could be implemented within say the next year or so that could actually have a material impact on the industry? I mean, I go to the trade tools again. I mean, those can be put in place rather quickly. The three or one studies that are ongoing that have started that, you know, as mentioned have due dates next week and then the hearings in April and May, the administration is looking to get those done by then to July. and implement tariffs by that time frame. So it's a pretty rapid time frame during the first Trump administration when they did the 301 study that led to this, you know, a whole host of tariffs being put on China in July of 2018 and ongoing, those studies took a year. So they're moving fast five months because they want to, you know, when the 122 tariffs that are global worldwide tariffs expire than in July, they want 301 to immediately come and replace them. So I think that is they're moving quickly. And, you know, if we decided to advocate for, you know, large tariffs or any sorts of tariffs on China or other countries, those could get implemented pretty quickly. And that would give that same protection. You could see the price change and the ability for the US companies to compete, you know, turn on a dime. So I do think that's the immediate tool. 232 and the pricing discussion, you know, it's been noted, it's been ongoing. But if the administration firm something up and I don't think they want to wait forever to do that, I think that could see impact as well. We need to act quickly to your question. The companies can't stand around and wait. This goes for any mineral, you know, a mining company or a processing company, graphite or otherwise, it is extremely capital intensive. And Eric is talking about tools to support the direct industry, but you need the demand poll here too. And you need market signals. So the pricing support helps loans and grants help content requirements are super important. And we saw that we have that in things like the 45X tax credit. If you're making a battery, you have certain FEOC foreign entity of concern now called prohibitive foreign entity requirements. All of that is going to support the industry holistically because, you know, we could produce the anode material here and then have to ship it abroad, right? That sort of defeats the purpose. And so you do need a holistic stride. All of these are important, but some of them need to happen now. One of those tools, as we've probably mentioned, is around pricing floors. How would this realistically work for a material like active anode material that is non-finishable? It's a good question because all the anode material has different characteristics. So each one could be potentially say, well, that one's not like that one. So how do you place it out? I think there is a commitment to try to not only do a mineral and pricing for a commodity mineral because remember minerals are all different too. They have different chemistry in them that makes them all different if you're mining graphite, it comes out with other stuff in it too. So how they sort of do an average in terms of that based on maybe HTS codes is my guess. But if you fit in this category of HTS code, that's the price for it, right? They're for graphite. How many codes are there? Eric, there are a lot. Yeah. Well, there's one big code, but there's a lot of subheadings. And there are different combinations of chemicals and materials. Yeah, and I believe there's an anode code too. We just worked with a company on Silicon anode HTS code, which is new in the code this year. So I believe that's probably the best place to go is to try to say, okay, if you're in this category of anode, this is the price. And they are going to be working on derivative product. So it's not just the mineral, but also further downstream, not easy to do though. So that's a good question. And would that be the same with the stockpiling? Would it be a similar approach? You mean with project vault or the national defense stockpile project vault? That is going to be a, I don't believe they're going to do the pricing support as part of that. The pricing floor will be part of forge. And that will be with countries setting a price that then, you know, like I said, if the commodity comes into the country below a certain price, they will be tariffed, right? So you must meet a certain thing on project vault. What is going to be driven by buyers and the sellers, the sellers in this instance being traxes, some mercuria and part tree, the trading houses. So a Lockheed Martin or a GM will say we need ex tons of graphite over this amount of time. The point is to try to get to 60 days of stockpile supply. The traders will go out into the market. They will house it when GM or Lockheed or whomever needs that content. They will be able to buy it at a set price that is agreed upon by the buyer and the seller. So it's really a private mechanism to set this up. You have a $2 billion of commitment from the original private sector partners. They will join and then you have a $10 billion loan associated with that $10 billion from XM. But otherwise the government is really not involved in the mechanics of that. They may sit on the project vault company board, but generally this is a private sector led initiative and how they do the pricing is TBD. And then jumping actually back into the anti-dumping and account of L.A.K.S. one thing that repeatedly came up was around the lack of qualified material. But it's the chicken and the egg problems. What policy mechanism could we see in the US that could break the cycle? Yeah. We've had, yeah, this is an ongoing conversation to answer a question quickly and then happy to get a little more into it. I mean, having talked to several of the potential off-take companies, I don't know if there's a role for the US government to be part of qualifications. So that's particular IP for each company. You can't really tell a four-door GM like this is how you should qualify a material. Would we like to see it faster? Of course. But there's all these steps they have to take to qualify and then they're qualifying a facility that are qualifying the actual manufacturing facility. Because these are such specialized materials and go through very intensive processes inside these companies. I don't know if there's a role for government. It was a long answer when I said it was going to be a short answer. So what we do know, and what we did here from testimony, this goes back to the trade, the initial staff hearing for ITC, which was back in January of 2025. During that hearing, Panasonic, one of the Panasonic witnesses actually did like, oh, we could speed up qualification to a question. So we know they can speed it up. I don't know if they can go in six months. Sometimes they say it's going to take 10 years from start to finish with all the facilities. Sometimes they say it takes two years. What I do know is it's in their control. Our companies are more than willing to send samples, do production, change, batching, etc. To make sure that they fulfill those qualifications. So I don't think there's a role for government because it's not our business to tell companies how they should do their internal processes. I do think companies could speed up a little bit just given the testimony that we heard. Could you do different policies on trade where you, if there's an off-take and a promise for purchasing qualifications, or a match that they could have a different trade regime, or different tariff regime, or something so you could see that investment of income, or at least the signal to the market or to the financing community that like, oh, Ford has promised X-Graphy Company that they're going to buy so many metric tons over those period of time if they meet those qualifications. The government could have a role there where they create the regime to allow for these off-takes to happen and use tools to change dials to give favorability to certain companies and porting product. But that's not a fully flushed idea. But just one place where you could have some sort of government involvement on the qualification, but to sort of interwoven with qualification. We need to be able to price supply chain security appropriately. We do things differently here. We don't have no cost capital. We have higher labor costs. We have environmental standards. We have to be able to value that and it comes down to that price differential. So if we're not going to do that, because the OEMs are competing for their lives too, they are competing against their equivalents in China and around the world and their margins are thin and a lot of them are losing money. And so if this is something that they can get around with some legal fees and some lobbyists and they're going to do it, they have to be able to, that pricing, that premium pricing has to be baked into the, to the equation, how the US government plays into that, whether it's the pricing floor or the tariffs, it has to be that market mechanism that levels the playing fields to get those players to pay attention and to speed up qualification. All the things Eric said that they can do, they know how to do, they can do, they can invest a little bit more when it's priced appropriately. And looking at 45X, we're briefly touched on it, but under the current guidance, some battery producers, I may still be able to qualify. for the manufacturing credit while still relying on Chinese and a material. Does this create a structural vulnerability? One that has existed and will continue to exist. So yes, it's not perfect. Again, it gets back to we want battery production here. We want car production here and our drone production. We want data centers here. We want all the things that we want, you know, expansion of grid and affordable grid assets, you know, for these companies to compete. That's the sort of the trade off that was made in the 45X tax credit, you know, in things like giving the OEMs the exemptions on the three of ones from years ago. That's part of the fight now is, you know, which part of the supply chain are we supporting at what time and at what price? So the, you know, not easy decisions, but it is sort, you know, not stuff that we necessarily agree with in 45X. I think if we had our choice, we probably would have gone harder, but we also were wanting to keep the credit lived so people could actually use it and it was a market making element of how people are doing business. So for existing battery companies and those doing processing, they can get this credit now. And yes, some Chinese material with the way that the calculations are done or how a prohibited foreign entity is calculated can have access to the credit and that's not fair, right? But that is the trade off that was made and there is a vulnerability there as well. And I view the US battery supply chain as strong as its weakest link. If we looked at what has happened in the past with China implementing export controls, they could stop the supply of graphite into the US overnight. Do you think the policymakers in the US fully appreciate and understand this risk? I hope so. We spent a lot of time telling them exactly that. And they've done that before, right? With graphite specifically. So I think they understand, again, going back to the vote, we were a little flumix than how that all came to pass. But again, commerce determined that there was dumping and there was subsidization, heavy subsidization. And that's why we got that 160% rate out of commerce. So I think government understands that they need protection. They need to stand up the industry. They need to give them space to end room to grow. This vote, it seems very out of sync with how the ITCs voted in the past, especially on Chinese issues. Obviously, as we noted, we're anxiously awaiting the full committee report to sort of dive into what their reasoning was for their vote. But yeah, I certainly hope so. We spent a lot of time and effort not only talking to officials in the Trump administration, whether political officials or career staff, but a lot of folks on Capitol Hill with that exact warning that the Chinese control this market, they can flip a light switch and that's put the real vulnerability, especially when it comes to national security, not only as a result, as a problem for electric vehicle battery production, but for the warfighter, they carry a lot of batteries for synthetic graphite that's going on missile tips and blast shields. Like we need that capability in the United States for a whole host of reasons. And so I do think many folks in the government get it and we don't understand why the vote happened the way it did. And we are trying to figure that out and anxiously awaiting the reasoning that the commissioners will put on in public. Defences taking center stage at the moment and graphite is also at the spotlight on the back of that. But do you think there's enough volume and demand from defense to support the industry? Defences are really important part of it. Eric had mentioned the rocket nozzles and blast shields and other they procure thousands of batteries that have graphite and among other parts of this, they're also starting to think through how to deploy small modular reactors on their bases. A lot of the reactor cores are made of graphite. The fuel is in graphite fears. So it's not enough demand. It's in small, small quantities that they're, but the quantity of it has increased over time. So we work with a company that supplies the industry, the defense industrial base and their orders have gone up over the last years. But it's nothing compared to the auto industry, which is 40, 50 and in a high year, 60% of the market. I think the graphite for the grid industry and the energy demand increase is probably the second biggest market for grid storage and data centers and then followed by defense, which is at a best or just on batteries alone is 2.5% of the demand. So it is a small thing, but in terms of how the US government can play a role, that's a big part of how the US government can step in and have its own use of graphite be from domestic sources and things like that. The final question just as we wrap this up, there's been a lot to unpack in this, but for both of you, what is one thing right now that gives you optimism about where this industry is hitting? I think it's an industry that is very close knit and that collaborates and coordinates all within legal parameters of antitrust, but has a will to succeed here, which means a lot, I think it has been a struggle to keep these businesses as you were saying, Harry, how long can they survive? There is a big will to make this work. We have the supply here. We have access to natural graphite from partners in Canada and Mozambique, other places around the world. There is a way to actually do it. We see a path forward and we do see coordination with the government working as well. I think, you know, obviously some pitfalls along the way, but I continue to be bullish on this and I, you know, am invigorated by talking to industry who really does want to keep momentum going and build their factories here. So, I'll let off ahead. I agree with everything, but I mean, I was going to go at the last point, which is despite this decision, despite some of the difficulty, we still see new companies trying to enter the market. You know, it's the one mineral that we can man-make in mass quantities. And so the fact that you see companies coming from Europe and elsewhere that still want a plan to flag in the U.S. or in Canada and produce synthetic graphite at the very least, because they can fit up shop in a lot of places is heartening for me. So the investment climate, even though it's a little wonky right now on the trade rules have changed a little bit. There's still a lot of interest in companies coming here and setting up shop, which says to me that this is going to be an industry that will will survive and grow. Fantastic. No, both. Yeah, thanks both Eric and Ben for coming on here today. It's been, yeah, very insightful. I think we're going to have to give you both back on once we hear the reasoning come out at the end of this month. Absolutely, love to. Thanks for having us, Harry. Thank you, Harry. Great. Well, thanks everyone for tuning into this episode of graphite hubs interview series. We'll see you next time.