The project is being built in the Inner Mongolian city of Bayannur with a total investment of 4.5 billion yuan (US$630 million), according to a report by state-run press agency Xinhua. Flake graphite is often used as a raw material for high-end precision instruments and battery anode material.

The mine's output would help reduce a reliance on graphite imports, particularly from Syrah Resources' Balama project in Mozambique, according to an analysis by commodity researcher Roskill. Total Chinese imports of flake graphite rose from 20kt in 2017 to 63kt in 2018 and 197t in 2019 - almost all from Balama.

"This new mine will go some way to fill the gap left by Syrah Resources' original design plan (which is scaling down production); however, even more capacity is likely to be needed to 2030 and the longer term," wrote Roskill.

The World Bank's 'Minerals for Climate Action' report stated in May that demand for lithium, cobalt and graphite could climb by 450-500% by 2050 due to demand for electric vehicles and other applications.