Syrah Resources Secures Loan Waiver Amidst Operational Challenges in Mozambique

Syrah Resources

Syrah Resources, an Australian-listed graphite producer, has secured a $53 million loan waiver from the US International Development Finance Corporation (DFC), providing crucial financial relief as the company faces operational disruptions at its Balama mine in Mozambique. This development comes weeks after Syrah triggered events of default on US government loans related to the mine.

Force Majeure and Loan Obligations

Syrah declared a force majeure at the Balama site on December 12th due to protests that restricted mine access.  Despite the operational challenges, the company confirmed on January 7th that it has not defaulted on payment obligations related to its $150 million DFC loan or its $102 million US Department of Energy loan.

Loan Waiver and Future Operations

The DFC's waiver applies to the first tranche of its loan to Syrah and is intended to provide working capital for the Balama mine. While operational staff have been evacuated from the site, security personnel remain on-site to protect the company's assets. Syrah will be able to access the remaining portion of its DFC loan once production restarts at Balama. However, the company has not yet announced a restart date.

Production Halt and Market Conditions

Syrah halted graphite production at its Mozambican plant in July due to sufficient inventory levels and weak demand for graphite fines. The company produced 24,000 tonnes of graphite at Balama during the second quarter of 2024 and spent the subsequent quarter utilizing its existing stockpiles.  Syrah had planned to resume graphite production at the site between September and December 2024 to rebuild its inventory.

Political and Social Unrest

Protests at Balama initially began in September but escalated significantly after Mozambique's highest court upheld the results of the October general election, which saw the long-ruling Frelimo party retain power. Syrah reports that operating conditions in Mozambique remain challenging due to the ongoing demonstrations following the elections, which continue to cause widespread disruptions.