Syrah Resources Gets US$220 Million Grant, Explores Graphite Deal with LG Energy Solutions

Australia’s Syrah Resources (ASX:SYR,OTC Pink:SYAAF) has been selected for a grant of up to US$220 million from the US Department of Energy to further develop its natural graphite active anode material facility in Vidalia, Louisiana.

The plant will use feedstock from Syrah’s Balama natural graphite operation in Mozambique, with production at the processing plant set to begin in the third quarter of 2023. The funds are intended to support the expansion of production capacity at Vidalia from 11,250 tonnes to 45,000 tonnes, for which the company is currently conducting a definitive feasibility study.

Once production begins, Syrah will become the only vertically integrated and large-scale natural graphite active anode material producer outside of China.

“In 2026, US-based lithium-ion battery manufacturing capacity is forecast to be almost 600GWh, which is estimated to require over 500,000 tonnes per year of graphite-based active anode material,” the Department of Energy said in a statement.

US President Joe Biden's ambitious goal is for half of all new vehicles sold in 2030 to be electric. On October 19, the Biden administration said it was awarding US$2.8 billion in grants for the production of electric vehicle batteries.

Syrah is one of 20 companies picked to receive grants; the money is being allocated through the Department of Energy with funds from the Bipartisan Infrastructure Law to companies in 12 US states.

Last week, the company also said it is working on a binding agreement with South Korea’s LG Energy Solutions (KRX:373220) for graphite supply starting in 2025. The Australian miner would initially supply 2,000 tonnes per year of graphite material, and increase it to at least 10,000 tonnes per year once the expansion at Vidalia is complete.

Syrah also has an offtake agreement in place with Tesla (NASDAQ:TLSA) for production from Vidalia, and has signed non-binding memorandums of understanding with Ford (NYSE:F) and SK On.

After the grant news, Syrah Resources saw its share price jump almost 25 percent to trade at AU$2.19 by early on October 20. It had risen further by the end of the day on October 24, sitting at AU$2.43.

Don’t forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.