Australian graphite producer Syrah
Resources’ announcement that it will slash
production in the last quarter of 2019 was met with relief by
delegates at Fastmarkets' Graphite 2019 conference in Berlin,
fueling hopes that lower output may return the market to
Attendees hotly debated the situation of the
Australian miner and the fate of its Balama project in
Mozambique, which was set up as a key ex-China supplier of
graphite for the battery industry, during the two-day
conference, held in the German capital on September 10-11.
Syrah, which also has a Battery Anode Material
(BAM) project in the United States, will cut its flake graphite
output target at Balama to 5,000 tonnes per month for the
fourth quarter of 2019, the company said on September 10. This
is down from 33,000 tpm reported by the company in the fourth
quarter of 2018.
Syrah said its decision to curtail production was
influenced by falling graphite prices in China driven by the
weaker yuan, cuts in Chinese subsidies for electric vehicles
(EVs) which have weighed on battery graphite demand, and new
production from Madagascar, coupled with a seasonal uptick in
output from Chinese mines.
Syrah ostensibly supplies mainly small flake
graphite to lithium-ion battery anode producers in China,
although some market sources have cast doubt on how much of
Syrah’s material actually qualifies for the
"In the six months to June 2019, China imported
105,000 tonnes of graphite, of which 75% was from Syrah,
primarily consumed in the battery supply chain," Syrah said in
Market doubtful over Balama’s
Jamie Deith, president of Canadian graphite
producer Eagle Graphite, said Syrah’s production
cut was not a surprise. "I felt for quite some time that the
Syrah project was insane, from an economics [perspective]," he
said during a panel discussion at Graphite 2019.
Deith’s view, seconded by other
panelists, was that Syrah brought too much graphite into the
market when demand was not growing at a sufficient pace to
absorb it, resulting in weak prices and oversupply.
"Dumping huge quantities of graphite, where there
wasn’t a huge shortage to begin with,
wasn’t a great idea," he said.
Puruvi Poddar, group manager at Indian supplier
Tirupati Graphite, said "prices may not increase [following
Syrah’s production cut], but they will not go down
But Stephen Riddle, chief executive officer of US
supplier Asbury Carbons, said that prices may not have bottomed
out yet. "They may not go down much more, but there is room to
go down," he remarked.
Other delegates told Fastmarkets that they were
not expecting such a sudden cutback from Syrah, although many
questioned the long-term viability of the project, which they
described as too large and as carrying high costs.
"Their costs won’t be going down
much, because about 30% of your costs in a mining operation are
fixed, from energy, fuel, labor and so on. You
don’t have much room to act there," one delegate
A Syrah executive told Fastmarkets shortly after
announcing the production cutback that: "it was the right thing
to do in light of the market weakness. We will continue to
BAM on track
In its interim results for the six months to the
end of June, released on September 13, Syrah said its BAM
project was making headway.
"We… continued to progress our Battery
Anode Material Strategy[("BAM"] in the US, with qualification
shipments of unpurified spherical graphite dispatched to target
customers," the company said.
"Construction and commissioning of the
purification circuit of the BAM facility in Vidalia, Louisiana,
is nearing completion, and dispatch of purified spherical
graphite for qualification purposes will follow," it added.
Syrah reported first production of spherical
graphite at the BAM using Balama material at the end of