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U.S. government lends $150M to graphite mining operation
Australian mining company Syrah announced on Wednesday that it has secured a loan of $150 million (€138.5 million) from the US government to invest in the Balama graphite mine in northern Mozambique.
In a statement sent to investors, Syrah said that the loan had been approved by the I U.S. International Development Finance Corporation (DFC), and that it was the first loan granted by this US government’s development finance institution to a graphite operation.
The company justifies the investment with “the importance of Balama to bolstering US supply chain security for critical minerals,” adding that the initial disbursement of $73 million is expected to be completed by November.
Syrah’s operations in Mozambique are carried out by its subsidiary Twigg Mining and Exploration.
The “DFC loan supports Syrah in managing near-term volatile natural graphite market conditions and continued operations in preparation for increased sales to ex-China anode customers” Syrah adds, saying that the loan has also already received approval from the Mozambican authorities.
The Australian firm is also building a battery material factory in Vidalia, USA, which will be supplied with Mozambican ore, in this case, two tonnes shipped in April last year, according to previous Syrah data.
According to government information, Mozambique’s production of graphite, an ore used in electric batteries, fell by 40% in the first half of 2024 due to the paralysis and interruption of activities in two mines.
According to data from the budget exception from January to June, Mozambique produced 34,899 tonnes of graphite in this period, 11% of this year’s target of 329,040 tonnes, which compares with 58,708 tonnes in the first six months of 2023.
The document said this sharp decrease was “the result of the paralysation of activities” at GK Ancuabe Graphite Mine since 2023, as well as the interruption of activities at Twigg Mining and Exploration “due to low demand for this mineral on the international market, coupled with price volatility”.
Syrah announced in April that the graphite mine in Balama, northern Mozambique, made its debut in the first half of the year by exporting graphite to an Indonesian battery manufacturer, which bought 10,000 tonnes.
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According to information released to the markets by Syrah, which owns theBalama mine in Cabo Delgado, this was the “first sale of large volumes” of natural graphite from Balama to Indonesia, acquired by BTR New Energy Materials.
According to Syrah, this is the “first large volume sale of natural graphite to a participant in the battery supply chain outside of China”.
“This bulk sale follows a trial shipment of containers of natural graphite fines from Balama to Indonesia” in the first of 2024, the mining company explained, adding that this export “is another important development” in the sales diversification strategy.
The mining company added that BTR New Materials Group is building a $478 million (€429 million) battery factory in Indonesia, “which is due to start production in 2024.” It is also forecasting new sales from that mine to the company.
According to the government’s forecast, this year Mozambique expects to produce more than 329,040 tonnes of graphite, the raw material needed to produce batteries for electric vehicles. This would be an increase of more than 180% compared to the 2023 performance.
In the document supporting the proposal for the Economic and Social Plan of the State Budget (PESOE) for 2024, the government stated that graphite production “will increase significantly”.
The estimate took into account the two companies’ plans to produce this mineral, even though by the first half of 2023, it was “at a 22% realisation” due to the “weak demand for this ore on the international market.” This led Twigg Mining and Exploration, the largest producer, “to temporarily interrupt its mining and processing activities in May and June.”
Mozambique produced 120,000 tonnes of graphite in 2020, a performance that fell to 77,116 tonnes the following year. The estimates for 2022 and 2023 were 182,024 and 117,416 tonnes, respectively.
