ARKANSAS, Oct 26 (Future Headlines)- Syrah Resources, an Australian producer, anticipates that buyers outside of China will ramp up their purchases of natural graphite before stricter export controls on the battery material take effect on December 1. China, the world’s largest graphite producer and exporter, will require export permits from that date for certain graphite products, including spherical graphite used by electric vehicle manufacturers.

Syrah Resources, which has a supply agreement with Tesla, operates graphite mining operations in Mozambique (Balama) and is in the process of constructing a plant in Louisiana to produce active anode material (AAM) for batteries. In May, the company temporarily halted mining at Balama due to oversupply-induced price declines.

The forthcoming export controls may necessitate automakers and battery material suppliers to expedite their efforts to identify alternative sources of this critical mineral. Syrah Resources noted that feedback from its customers and analysts indicates that buyers are considering stockpiling graphite to mitigate the risk of near-term supply disruptions before the ban takes effect and in anticipation of China’s reduced natural graphite production during the winter.

Any disruption or reduction in China’s supply of anode precursor or AAM without replacement supply could have implications for battery production outside of China. The uncertainties surrounding the impact of these controls on Chinese supply are expected to persist into 2024. However, Syrah Resources does not foresee any immediate and significant impact on demand for its Mozambique project originating from China.

The company’s statement underscores the heightened importance of Syrah Resources as a unique supplier of natural graphite and AAM outside of China in the battery supply chain. Australian government officials are currently visiting the United States to strengthen cooperation on critical minerals, aligning with global efforts to secure these essential resources.

Syrah Resources’ stock saw a notable spike of 43% to A$0.95 per share when the export controls were announced but later traded at $0.66 cents on Thursday. Additionally, the U.S. International Development Finance Corporation (DFC) approved a loan of up to $150 million for Syrah’s Mozambique operations in the previous month. This financial support reflects the strategic importance of securing natural graphite and AAM for the global battery supply chain, which is pivotal to the growth of the electric vehicle and renewable energy sectors.

Alireza Sabet; Editing by Sarah White