AusSuper-backed Syrah big winner as US funds critical minerals projects

Australian Super-backed Syrah Resources has emerged a big winner as the US doubles down on its critical minerals scheme in the dying days of the Joe Biden administration.

Graphite is on the critical minerals’ wishlist around the world.

ASX-listed graphite producer Syrah Resources has received nearly $270m in additional backing from US taxpayers as debate rages in Australia about tax credits for the critical minerals sector.

Syrah, backed by Australian Super, was one of the big winners as the US Internal Revenue Service splashed out $US6bn in tax credits in the dying days of the Joe Biden administration.

The tax credits are part the Inflation Reduction Act (IRA) in the US, which was used a model for the Albanese government’s critical mineral production tax incentive opposed by the Coalition.

The PM defended the tax incentive scheme last week after the Minerals Council of Australia warned an overarching “community benefit” requirement risked duplicating green tape and community consultation requirements.

Syrah said on Monday that it had been awarded a tax credit of about $US165m ($268.1m) under a scheme to boost US critical materials processing capacity in line with the economic and energy security goals of the IRA.

The tax credit will support the potential expansion of Syrah’s active anode material plant in Louisiana to 45,000 tonnes a year. The company started processing at the Vidalia plant, already partly funded by US taxpayers, last year and has an offtake deal with Elon Musk’s Tesla.

Syrah last week secured some relief on US funding arrangements with no end in sight to deadly protests that have forced the shutdown of its graphite mining operations in Mozambique.

The Syrah share price jumped 10 per cent to 24.7c in trading on Monday – the highest point since the company revealed the impact of the protests on its Balama mine – before trimming back to 23.8c in afternoon trading.

AusSuper owns about 33 per cent of the stock.

Syrah declared force majeure on graphite production in December and disclosed it was in default on loans with the US International Development Finance Corporation (DFC) and US Department of Energy (DoE).

The company has reached a conditional waiver agreement with the DFC around defaults on a $US150m loan and remains in talks with the DoE about its $US102m loan facility.

The latest IRA assistance is a sign the US intends to stick with Syrah as part of a strategy to reduce reliance on Chinese supply of graphite and other critical minerals.

Based on the DoE’s recommendation, Syrah was selected from more than 350 applications for a slice of the $US6bn round of what is known as the 48C tax credit program under the IRA.

The tax credit can be monetised for cash through its transfer to a third-party US federal taxpayer and/or used to offset Syrah’s corporate income tax liabilities in the US.

To claim the tax credit, Syrah must satisfy meet certain wage and apprenticeship requirements as well as project milestones.

Mozambique's main opposition leader Venancio Mondlane returned from self-imposed exile last week. Picture: Alfredo Zuniga/AFP

Syrah said commercial sale from the existing 11,250 tonnes Vidalia plant and significant customer commitments were vital to finalising project finance and the timing of a final investment decision.

There are fears of an escalation in protests this week with Daniel Chapo, the leader of ruling Frelimo party, due to be sworn in as president.

Opposition leader Venancio Mondlane returned from self-imposed exile late last week and continues to dispute the result of the elections last October that ignited the protests.

Syrah has installed security officers to protect the Balama mine.

Originally published as AusSuper-backed Syrah big winner as US funds critical minerals projects