Syrah Resources Declares Force Majeure at Mozambique Graphite Plant Amid Civil Unrest

Syrah Resources

Sydney-based graphite producer Syrah Resources has declared a force majeure at its Balama operations in Mozambique, signaling significant disruptions due to post-election civil unrest in the country. The declaration comes as the company faced defaulted payments on debts backed by the US government.

Production Halt and Financial Strain

Syrah Resources reported that ongoing protests, which began in late September at the Balama site due to historical farmland resettlement grievances, have escalated following Mozambique's general election in October. Allegations of electoral fraud have led to violent protests across major cities, exacerbating the situation and preventing production activities. The unrest has not only halted production from October through December to replenish inventory but also hindered sales to customers, resulting in a declared force majeure event.

Implications of the Default

The unrest and consequent production stoppage have led to events of default on loans with significant US entities—the US International Development Finance Corporation (DFC) and the Department of Energy (DOE). The US DFC had previously extended a $150 million loan to Syrah for graphite operations, marking its first such financial engagement. Additionally, Syrah received a $102 million loan facility from the US DOE to expand its Syrah Vidalia anode active material facility in the US. The company is currently engaging with both entities to address the defaults.

Despite peaceful protest actions, which have not deliberately damaged property, plant, or equipment at Balama, Syrah acknowledges that resolving the situation will be a lengthy process. The company is striving to restore operations as quickly as possible. Notably, production at Balama has been on hold since July due to adequate existing inventory and low demand for graphite fines.