The Elements of Innovation Discovered
The Elements of Innovation Discovered
Metal Tech News - December 12, 2024
Civil unrest following the October national elections in Mozambique has forced Syrah to declare force majeure for its Balama graphite mine in the African nation.
Syrah's Balama graphite operation in Mozambique has been a major source of graphite outside of China.
The Biden administration's bet on friendshoring graphite for electric vehicle batteries from a mine in Africa suffered a major blow with Syrah Resources Ltd.'s Dec. 12 declaration of force majeure for its Balama graphite mine in Mozambique and a notice that it will default on more than $250 million in loans from United States government agencies.
The Australia-based company attributes its inability to meet the graphite contract and loan obligations to ongoing protests and civil unrest in Mozambique that forced the company to shutter operations at Balama.
"Most operational personnel have been demobilized from the site and a full contract security presence remains onsite," Syrah penned in its force majeure announcement.
The Balama shutdown is the result of local protests that began in September due to grievances related to the resettlement of a group of farmers where the mine is located. These demonstrations have grown in intensity due to the national unrest that has followed the Oct. 4 Mozambique national election.
Syrah says it has been working with authorities within the Mozambique government to resolve the local protests. Given the national instability – which has claimed the lives of more than 110 people due to allegations of fraud during the election of the country's next president – any resolution will likely need to await the presidential election outcome and a cooling of tensions amongst the electorate.
"The company acknowledges that resolution of the Balama protest will take time due to broader unrest and disruptions across Mozambique and the new Mozambique government not being formed until January 2025," Syrah wrote.
The shutting down of the Balama mine and the larger civil unrest in Mozambique significantly impact the global supplies of graphite, the single largest ingredient in lithium-ion batteries for electric vehicles and countless electronic devices.
According to the U.S. Geological Survey, approximately 77% of all mined graphite and more than 90% of the world's graphite anode material is produced in China.
Mozambique is the world's second-largest producer, accounting for 27% of the global supply of mined graphite not originating in China.
Syrah's Balama graphite operation in Mozambique has been a major source of graphite outside of China.
The U.S., which does not currently have any graphite mines in operation, bet heavily on Balama being a significant source of this mined material critical to the energy transition.
The backing of a graphite supply chain that begins in Mozambique includes a $150 million loan from the U.S. International Development Finance Corp. (DFC) for the Balama mine and roughly $322 million in loan guarantees and grants from the U.S. Department of Energy (DOE) to help Syrah establish its Vidalia graphite anode materials plant in Louisiana that would upgrade the graphite shipped from Africa.
In January, Alaska Sen. Lisa Murkowski expressed deep concern over the U.S. government's heavy investment into stamping Mozambique graphite as "Made in America" due to it being upgraded to anode material in Louisiana.
"How can you tell me that the administration is really committed to domestic sourcing when we are not putting our resources there?" she asked DOE Deputy Secretary David Turk during a Senate Energy and Natural Resources Committee hearing on EV supply chains.
Murkowski grilled the deputy secretary on why DOE was investing so heavily in supporting a supply chain that begins in Mozambique but has not put any support behind Graphite One Inc.'s proposed all-American supply chain that would include a mine at Graphite Creek, a project in her home state of Alaska that hosts one of the world's largest deposits of graphite, and anode processing plant in Ohio.
While not directly answering the question, Turk hinted that the investment in Syrah was seen as the quickest way to secure graphite anode material for the U.S.
"Right now, China absolutely dominates the graphite processing market," was Turk's response.
China has the potential to leverage this domination of global graphite supply chains to cripple America's economy and burgeoning EV sector. Toward the end of 2023, the communist nation put in place policies that require government approval for graphite. Earlier this month, China used identical controls to ban the exports of antimony, gallium, and germanium to the U.S.
To help steer U.S. graphite supply chains away from China, DOE awarded Syrah $220 million in grants and a $102 million loan to develop and expand its graphite processing plant in Louisiana.
With the unrest in Mozambique forcing Syrah to shut down operations at Balama, it has become uncertain if and when Syrah will pay back the loans.
"The impacts and duration of the protest actions have triggered events of default in the company's loans with United States International Development Finance Corporation and United States Department of Energy," Syrah wrote.
With more than 16 years of covering mining, Shane is renowned for his insights and and in-depth analysis of mining, mineral exploration and technology metals.
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