In early March, Syrah Resources announced a problem with its drying circuit at Balama, which has caused a temporary setback to production ramp-up at the Mozambique graphite project. Although repair costs are thought to be low, it could take around eight weeks to fix the problem; during this time, graphite production could be cut to around 65% of expected output.
Deutsche Bank has since commented that Syrah has significant cash reserves and does not expect the repairs to cause a major problem. Meanwhile, Credit Suisse has forecast graphite production at Balama at around US$400/t by the end of 2018 with Syrah Resources becoming cash positive by the second half off the year.
Roskill view: Syrah Resources began production of graphite at its Balama project in November 2017. It is now working to ramp up production and fulfil supply deals. It had aimed to produce 160-180ktpy production in 2018, increasing to 250-300ktpy in 2019. Supply deals include that made with Shenzhen BTR New Energy Materials (China’s largest anode material producer and a major producer of spherical graphite) for 30kt of graphite during the first year of production and Zhanjiang Juxi New Energy Materials for 20kt.
This is the second setback Syrah Resources has experienced in 2018, following an announcement in January regarding progress on its proposed spherical graphite plant in Louisiana, USA. The governing authority of the proposed port location determined that the plant would not to be a suitable fit for the site. Syrah resources hopes to one use graphite from Balama to supply its own spherical graphite plant, rather than supplying into China for processing there.
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