Tesla supplier Syrah expects more graphite buys ahead of China export ban

Syrah Resources

26/10/2023 03:31

Oct 26 (Reuters) - Australian producer Syrah Resources
 SYR.AX  on Thursday said it expects buyers outside of China to
step up their purchases of natural graphite before stricter
export controls on the battery material came into effect on
December 1. 
    China, the world's largest graphite producer and exporter,
will require export permits as of Dec. 1 for some graphite
products, including spherical graphite used by electric vehicle
makers.
    Syrah, which has a supply deal with Tesla  TSLA.O , mines
graphite at its Balama operations in Mozambique and is building
a plant in Louisiana where it will produce active anode material
(AAM) for batteries. In May, it paused mining at Balama after
oversupply hit prices. 
    The export controls could mean that automakers and suppliers
of battery materials will have to accelerate their search for
alterative sources of the mineral. 
    Syrah said that, based on feedback from its customers and
analysts, buyers are looking to stockpile graphite to reduce the
risk of near-term supply disruptions ahead of the ban, and ahead
of China's winter when it tends to produce less natural
graphite.
    "Any disruption or reduction in China anode precursor or AAM
export supply without replacement supply would impact battery
production outside China," it said.  
    Uncertainties regarding the impact of the controls on
Chinese supply is expected to continue into 2024, Syrah added,
but for now, it does not expect any near-term "meaningful"
impact demand from China on its Mozambique project.
    "Although the impacts of implementation are not yet known,
the announced graphite export controls in China are increasing
Government and private sector attention on the strategic
importance of Syrah as a unique ex-China natural graphite and
AAM supplier in the battery supply chain," the company said in a
statement.
    Syrah's comments come as Australian government officials
visit the United States to shore up cooperation over critical
minerals.
    Shares in Syrah spiked to 43% to A$0.95 a share on Friday
when the export bans were announced before trading at $0.66
cents on Thursday. 
    The U.S. International Development Finance Corporation (DFC)
 last month approved a loan of up to $150 million for Syrah's
Mozambique operations.

 (Reporting by Roushni Nair in Bengaluru and Melanie Burton in
Melbourne, editing by Miral Fahmy)
 ((Roushni.Nair@thomsonreuters.com;))