Syrah Faces Qualification Delays but Eyes Growth as US Tariffs Reshape Market
Syrah Resources reported resumed production at its Balama graphite mine and ongoing qualification delays at its Vidalia anode material facility, while US tariffs on Chinese graphite reshape global supply chains.
- Balama graphite production resumed with 26kt produced and 24kt sold at US$625/tonne
- Vidalia Active Anode Material facility operating at low volumes amid extended customer qualification
- A$70 million capital raise completed to fund operations and strategic initiatives
- US tariffs on Chinese graphite and export controls bolster Syrah’s ex-China supply positioning
- Partnership and financing options underway to support Vidalia expansion and strengthen balance sheet
Operational Recovery at Balama
Syrah Resources has successfully resumed operations at its flagship Balama Graphite Operation in Mozambique following an extended non-operating period. The company produced 26,000 tonnes of natural graphite during the quarter, with 24,000 tonnes sold and shipped to third-party customers at an average price of US$625 per tonne. Despite some temporary operational challenges impacting product quality and recovery rates, Syrah has undertaken maintenance and production trials to restore optimal processing conditions. The company is operating Balama in campaign mode but retains the flexibility to ramp up capacity should demand increase.
Vidalia Facility Faces Qualification Delays
In the United States, Syrah’s Vidalia Active Anode Material (AAM) facility continues to operate at low volumes as it advances customer qualification processes. While the facility has met technical specifications, customers have requested specific adjustments before finalising commercial purchasing. As a result, Syrah no longer expects Vidalia AAM sales to commence within 2025. The company remains engaged with key partners including Tesla and Lucid, and is actively pursuing additional offtake agreements to underpin future sales and support a final investment decision for Vidalia’s further expansion.
Strategic Capital and Financing Initiatives
To support ongoing operations and growth, Syrah completed a A$70 million institutional placement and entitlement offer during the quarter. The capital raise strengthens the company’s liquidity, with a quarter-end cash balance of US$87 million, including restricted cash reserves. Syrah is also managing its loan facilities with the US Department of Energy and the US International Development Finance Corporation, including a forbearance agreement on the DOE loan that provides financial flexibility through mid-2027. Additionally, Syrah has initiated a process to explore partnering and investment options aimed at enhancing its strategic position and de-risking its growth strategy.
Market Dynamics and Policy Environment
Global electric vehicle sales surged 28% year-on-year in the September quarter, driving increased demand for battery materials. However, the market remains complex, with Chinese government export controls on graphite and battery materials exacerbating supply chain instability outside China. The US government’s imposition of antidumping and countervailing duties on Chinese graphite and AAM imports, alongside tariffs of up to 105%, is reshaping the competitive landscape in favour of ex-China suppliers like Syrah. These policy developments are expected to accelerate demand for Syrah’s products and support domestic US sourcing initiatives under the Inflation Reduction Act.
ESG and Differentiation
Syrah continues to emphasize environmental, social, and governance (ESG) initiatives to differentiate its products from Chinese competitors. The Balama operation has achieved Responsible Mining Assurance certification, and Vidalia is pursuing Responsible Minerals Assurance. These efforts align with growing customer and regulatory expectations for sustainable and ethically sourced battery materials.
Bottom Line?
Syrah’s ability to navigate operational challenges, evolving US trade policies, and customer qualification hurdles will be pivotal as it seeks to capitalize on growing ex-China graphite demand and advance its Vidalia expansion.
Questions in the middle?
- When will Vidalia’s AAM facility commence commercial sales and ramp up production?
- How will final US antidumping duty determinations impact Syrah’s competitive positioning?
- What outcomes will emerge from Syrah’s partnering and investment process to strengthen its balance sheet?
