Mozambique: Syrah pauses operations in Balama as Chinese demand falls

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Mozambique: Syrah pauses operations in Balama as Chinese demand falls

6:28 CAT | 18 Jul 2023

File photo: Syrah Resources

Australian mining company Syrah Resources announced on Tuesday that it produced 15,000 tonnes of graphite for electric car batteries in April, which it exports from Cabo Delgado, northern Mozambique, having halted production the following month due to international stockpiles.

“Balama plant operations were paused, resulting in no production, in May and June 2023 due to volatile Chinese anode market conditions and good availability of finished product inventory,” said the second quarter activity report, released on Tuesday by Syrah and in which it estimates costs of US$4 million (€3.5 million) for each month of closure at that unit.

The Australian mining company’s production in Cabo Delgado had risen to 41,000 tonnes of natural graphite in the first quarter of this year, compared to 35,000 tonnes in the previous quarter, above sales, which rose from 28,000 to 30,000 tonnes.

In today’s information, the company also justified the decision to suspend production in May. “The decision to pause production was made to allow for downstream inventory consumption to occur and natural graphite demand conditions to improve”.

“A production restart decision will be dependent on increasing sales from inventory, and new sales orders at prices above unit operating costs at production volumes averaging at least 10kt per month, in line with the Balama operating mode review,” said the document, in which Syrah acknowledges that “sales orders and price bids for Balama natural graphite products have not yet reached this level”-

Syrah was one of the mining companies whose operation was affected by the armed conflict in Cabo Delgado.

In June 2022, the supply chain was temporarily suspended due to attacks that came close to the road the graphite is shipped out on.

In November, the mine’s facilities had to be evacuated due to violence in the neighbourhood.

The mining company had been progressively recovering production at the Balama unit and, in April, operated “uninterruptedly”, although still at “approximately 50% of capacity”.

“The Company is focusing on strengthening plant reliability and identifying and implementing operational efficiencies during the production pause” Syrah added.

The Australian firm is also building its own Vidalia battery material plant in the US, which will be fed with ore from Mozambique, in this case with two tonnes shipped in April.

“The Company is focusing on strengthening plant reliability and identifying and implementing operational efficiencies during the production pause,” reads tithe Syrah quarterly report

Source: Lusa