Australia’s Syrah Resources saw its stock plummet by approximately 30% on Thursday after the company declared a force majeure at its Balama graphite mine due to escalating civil unrest in Mozambique following contested election results.
Syrah Resources stands out as the largest graphite producer outside of China, offering one of the few non-Chinese sources of this vital material through its Balama mine in Mozambique. Graphite is essential for electric vehicle batteries and nuclear reactors, and while China dominates the global refining market, Syrah’s operations provide a crucial alternative for companies looking to diversify their supply chains away from Chinese control.
But the continued unrest, which erupted after the October general election, has led to widespread disruptions across the nation, significantly affecting various mining operations.
Ongoing protests have hindered government efforts to address illegal demonstrations at Balama. Initially sparked by a small group of farmers with grievances over land resettlement, these protests began in late September and have since escalated, complicating Syrah’s operational capabilities. Following the announcement of election results on October 9, protests have continued, with local residents conflating unrelated issues with the resettlement process at Balama.
In a statement released on Thursday, Syrah noted that “the movement of people and supplies, site access and plant operations have continued to be interrupted.” As a result, the company has demobilized most of its operational personnel from the site while maintaining a full security presence.
The deteriorating conditions in Mozambique and the announcement of further national protests have left Syrah unable to proceed with its production campaign at the Balama operation for the December 2024 quarter, which is crucial for replenishing its finished product inventory and fulfilling customer sales. The company indicated that resolving the situation at Balama will take time due to the broader unrest and the fact that a new government will not be formed until January 2025.
Additionally, the prolonged protest actions have triggered events of default on Syrah’s loans with the U.S. International Development Finance Corporation (DFC) and the U.S. Department of Energy (DoE). The company is currently in discussions with these agencies regarding these defaults.
Editorial @ ESGFrontiers @lloydnedohe_ on X
