Australia’s Syrah Resources shares tank on force majeure , US loan defaults – Reuters

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Australia’s Syrah Resources shares tank on force majeure , US loan defaults – Reuters

9:10 CAT | 12 Dec 2024

File photo: Syrah Resources

Shares of Australia’s Syrah Resources plunged to a near five-year low on Thursday after it declared force majeure at its Balama graphite project in Mozambique due to disruptions from protests exacerbated by ongoing civil unrest, which also led the company to default on its U.S.-backed loans.

Its shares were trading 28% lower at A$0.190 as of 0401 GMT, their lowest level since mid-March 2020.

The stock fell as much as 32.1% earlier in the session to A$0.180, its biggest intraday drop in nearly five years.

The company said that farmer-led protests at the Balama project began in late September and have been hindering the movement of people and supplies and disrupting operations.

Force majeure is a clause that allows parties in a contract to avoid liability for unexpected external circumstances that prevent them from meeting obligations.

Mozambique has also been rocked by civil unrest after election results in October, currently being disputed by opposition parties, which has affected the government’s ability to resolve the protests at Balama, the miner said.

“With conditions continuing to deteriorate across Mozambique…Syrah is unable to undertake a production campaign at Balama in the December 2024 quarter that is required to replenish finished product inventory, and for customer sales,” it said.

In 2023, Syrah sold 85,000 tonnes of graphite from Balama, earning $47.7 million in revenue from the project, its only operational and money-making mine in Mozambique.

The protests have also caused the company to default on its loans with the U.S. International Development Finance Corporation (DFC) and the U.S. Department of Energy (DOE).

The DFC has pledged $150 million in loans to help fund operations at Balama, while the DOE loaned the firm $102 million in 2022 to expand its facility in Louisiana.

Earlier this week, miner South32 withdrew its output forecast for its Mozal Aluminium smelter in Mozambique due to the protests.

Source: Reuters