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Syrah Resources Anticipates Increased Graphite Demand Before Chinese Export Restrictions Are Enforced

Syrah Resources Anticipates Increased Graphite Demand Before Chinese Export Restrictions Are Enforced

The Australian mining company Syrah Resources, which explores and exports graphite for electric car batteries, revealed on Thursday 26 October that it expects buyers outside China to increase their purchases of natural graphite before strict export controls for this mineral come into force on 1 December.

A report by British news agency Reuters points out that China, the world’s largest producer and exporter of graphite, will require export licences from 1 December for some products, including the spherical graphite used by electric vehicle manufacturers.

Syrah, which has a supply agreement with Tesla, extracts graphite at its Balama operations in Cabo Delgado, northern Mozambique, and is building a factory in the town of Vidalia, in the US state of Louisiana, where it will produce active anode material (AAM) for batteries. However, in May this year, the company suspended graphite mining in Balama, after oversupply caused prices to fall.

Thus, according to the mining company, “export controls could mean that car manufacturers and battery material suppliers will have to speed up their search for alternative sources of the mineral”.

Quoting the same publication, Syrah said that based on feedback from its clients and analysts, buyers are looking to stockpile graphite to reduce the risk of short-term supply disruptions ahead of the ban and ahead of the Chinese winter, when China tends to produce less natural graphite.

“Any interruption or reduction in the supply of anode precursors or AAM exports in China, without a replacement supply, would have an impact on battery production outside China,” reads the news release, emphasising that uncertainties about the impact of controls on Chinese supply are expected to continue until 2024. However, for the time being, no “significant” short-term impact is expected from China’s demand on Syrah’s project in Mozambique.

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In a statement quoted by Reuters, the mining company also said that although the impacts of the implementation are not yet known, the graphite export controls announced in China are increasing government and private sector attention to Syrah’s strategic importance as a single supplier of graphite outside the country.

Meanwhile, the mining company’s comments come at a time when an Australian government delegation is visiting the United States to strengthen co-operation on critical minerals.

A few days ago, the Australian mining company revealed that in the third quarter of this year, 18,000 tonnes of graphite were produced at its Balama mine, stressing that “the figures are still not entirely satisfactory, as they are lower than those recorded in the same period last year”, but they exceed those of the second quarter, when the mine produced 15,000 tonnes.

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