Syrah Resources’ mining operations and US funding arrangements in limbo
Graphite and electric vehicle player Syrah Resources’ mining operations and US funding arrangements are in limbo amid post-election protests in Mozambique.
AustralianSuper-backed Syrah Resources’ graphite mining operations and US funding arrangements are in limbo as post-election protests rock Mozambique.
Syrah declared force majeure on graphite production on Thursday and revealed it had moved workers off site at its Balama mine in the south-east African nation.
The Syrah share price plunged more than 28 per cent to 19c in early trading after the company disclosed it was now in default on loans with the US International Development Finance Corporation (DFC) and US Department of Energy.
Syrah said the situation in Mozambique was deteriorating and that it couldn’t carry out the mining needed in the December quarter for customer sales and to replenish inventory.
AusSuper is a long-time backers of Syrah through multiple equity raising and now owns almost 33 per cent of the stock.
Syrah said the impact and duration of the protests had triggered the loan default and it was now in talks with the US lenders.
Syrah Resources’ US loan
The company locked in a $US150m loan with DFC at the end of October in a deal aligned with US goals to encourage development in Africa and critical minerals supply chains.
Syrah is touted as the only vertically integrated natural graphite active anode material supplier outside of China and has bet big on supplying electric vehicle makers, including via an offtake deal with Elon Musk’s Tesla.
Tbe company started downstream processing in the US earlier this year at a factory part funded by US taxpayers.
Mozambique has been gripped by protests over the disputed results of the October election that saw the ruling Frelimo party, led by presidential candidate Daniel Chapo, maintain its decades-long grip on power.
The results are being contested by opposition parties alleging electoral fraud and other irregularities, and the Mozambique Constitutional Council is yet to confirm the election results.
Amnesty International has accused the government of a bloody crackdown on protesters that has led to at least 110 deaths.
South32 withdrew production guidance for its Mozal Aluminium business in Mozambique on Tuesday.
Mozambique unrest
The nationwide protests and have compounded problems Syrah faced with farmers displaced by its mining operations. The farmers, who have historical resettlement grievances, started their protest in September.
Syrah told the market the wider unrest had hindered the ability of district and provincial Government authorities to resolve what it described as illegal protest actions at Balama.
People not directly involved in the farmer resettlement process have joined the protest at the mine since the election “conflating unrelated issues and objectives”.
“The movement of people and supplies, site access and plant operations have continued to be interrupted. Most operational personnel have been demobilised from the site and a full contract security presence remains onsite,” Syrah said.
“The protest actions have been peaceful with no evident actions to deliberately damage property, plant or equipment at Balama.”
Syrah was granted a provisional injunction by a court in Balama after seeking restraining orders on protest organisers.
However, it remains unclear if the injunction will be enforced by district authorities and if it will be effective in removing the protest leaders.
Syrah said Mozambique government authorities had been unable to support right of access obligations under its mining agreement.
