Syrah Resources declares force majeure for Balama graphite mine
Syrah Resources has declared force majeure for its Balama graphite mine, citing disruptions from protests linked to Mozambique’s disputed election.
Transport to the mine and operation of the processing plant have been heavily impacted, with workers sent home and security contractors stationed on site. The unrest has triggered defaults on two major US government-backed loans: $150 million from the United States International Development Finance Corp. for Balama and $98 million from the US Department of Energy to support a downstream processing facility in Louisiana. Syrah’s shares dropped as much as 32%, closing at 19 Australian cents, a sharp decline from their November 2022 peak of A$2.62.
Efforts to resolve the protests through dialogue with government authorities, community leaders, and protesters have been unsuccessful. Transport interruptions have also affected other companies, including South32 Ltd., which withdrew its guidance for an aluminum smelter in Mozambique earlier in the week.
Impact
AustralianSuper Pty Ltd., Syrah’s largest shareholder with a 32% stake, stated it is closely monitoring the situation and engaging with stakeholders. The Balama mine supplies graphite for batteries used in electric vehicles, a critical material for the energy transition. Syrah has a supply agreement with Tesla Inc. for graphite processed at its Louisiana facility.
The loan defaults could strain Syrah’s ability to meet obligations, impacting its financial health and operations. Disruptions at Balama may affect global graphite supply, especially for key partners like Tesla.
Syrah’s focus remains on resolving the unrest through legal and diplomatic channels. Continuous dialogue with major stakeholders, including AustralianSuper, will be critical. Diversifying supply sources and securing alternative operational frameworks could mitigate long-term risks.
