On 2nd October, the Australian company Syrah Resources reported that a fire took place overnight at the primary classifier screen of its Balama operation in Mozambique. No injuries were sustained and the fire was isolated to this section of the plant. Trading has been halted as the company assesses ‘damage to the screen deck, pipe and electrical equipment’ and potential ‘repair time and the impact on production’. Based on a preliminary assessment, there has been no major structural damage.
Roskill view: Time taken for any repairs could potentially decrease Syrah Resources’ Q3 concentrate production level to even further below original projections. The company had already downscaled its flake graphite production estimate for 2018 from 160-180kt to 135-140kt after reporting lower than expected H1 output. Syrah had hoped to turn things around in the second half of the year, increasing capacity utilisation to around 70% by the end of 2018. September production was reported to be 15kt, lower than previous estimations for the month of 18kt. The company now expects Q3 production to be 39-40kt, up 85% on Q2 output of 21.2kt.
Syrah Resources aims to be cash flow positive from late-2018 (pushed back from the original target of mid-2018) and to bring operating costs (FOB Port of Nacala, excluding government royalties and taxes) down to below US$400/t in 2019. In its June quarterly, it hinted that investment in construction of its US-based battery anode material (BAM) plant may be pushed back till after cash flow becomes positive.
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