ADELAIDE, Australia—Ivan Williams reckons he can help to break China’s dominance of a key ingredient of electric-vehicle batteries. To do so, he has been collecting wood chips from sawmills around the world.

At a test plant in New Zealand’s picturesque Marlborough wine region, Williams and his team feed the wood chips into machines that turn out a form of synthetic graphite. He says the engineered material is as pure as synthetic graphite made from fossil fuels, which is mostly produced in China and can account for as much as half of the weight of a lithium-ion battery.