Syrah Resources Executes Binding Offtake Agrement with Posco Marking Shift Away from Chinese Graphite Suppliers

Introduction:

Syrah Resources, an Australian graphite producer (ASX: SYR), has solidified a significant move away from Chinese suppliers of battery metals with the recent signing of a binding offtake agreement with South Korea's Posco Future M. This strategic deal reflects a broader global trend among companies seeking alternatives to Chinese sources for critical battery materials, especially active anode material (AAM), a key component in modern electric vehicle (EV) batteries and energy storage.

Posco Future M: A Major Player in Battery Materials:

Formerly known as Posco Chemical, Posco Future M is a major player in the battery materials sector, specializing in cathode active materials and AAM. The company has emerged as a key player in the global production of AAM, and the recent agreement with Syrah Resources positions it strategically to increase its natural graphite AAM production capacity in the coming decade.

Syrah's Unique Position:

Syrah's Managing Director, Shaun Verner, emphasizes the uniqueness of their position in having natural graphite and AAM supply outside of China. The natural graphite fines from Syrah's Balama operations in Mozambique are recognized as a crucial global source for AAMs. The offtake agreement with Posco highlights Syrah's role as a vital non-Chinese supplier in the evolving landscape of battery material procurement.

Global Response to Chinese Export Controls:

The move away from Chinese suppliers gains momentum as governments worldwide, particularly China and the U.S., implement measures affecting the export of designated graphite products. China's decision on December 1, 2023, to impose export controls on "dual-use" graphite products further intensifies the urgency for global industries to diversify their sources.

Uncertainties and Administrative Barriers:

Export licensing controls now apply to all consignments of natural graphite and its products from China, introducing greater uncertainty and administrative barriers for global supply chains. This has prompted a heightened focus on securing sustainable upstream supply of natural graphite outside of China, especially for the lithium-ion battery chain.

Strategic Importance of Ex-China Supply Chains:

Syrah's Verner underlines the strategic importance of ex-China supply chains, particularly for North American battery manufacturers and auto original equipment manufacturers (OEMs). To qualify for the U.S. government's Section 30D credit, companies aim to source AAM that does not contain critical minerals extracted, processed, or recycled by foreign entities of concern (FEOC), including China.

Balama: A Critical Alternative Source:

Syrah's Balama operations emerge as the sole major independent source providing high-quality, large-volume alternatives to meet the evolving requirements of ex-China and non-FEOC battery supply chains. The offtake agreement with Posco, spanning six years, solidifies Syrah's role as a key contributor to the global push for diversified and sustainable sources of battery materials.

Conclusion:

The strategic alliance between Syrah Resources and Posco Future M serves as a notable signal of the growing trend among global companies to move away from Chinese graphite suppliers. As industries seek reliable, non-Chinese sources for critical battery materials, the landscape of international supply chains continues to evolve, with Syrah playing a crucial role in shaping the future of battery material procurement.

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Source: Reuters

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