Australia-based Syrah Resources has signed a binding offtake agreement with Tesla for the supply of graphite as active anode material from its Vidalia production facility in the US state of Louisiana.
Tesla will take the majority of the planned initial expansion of production capacity there at a fixed price for an initial term of four years. The agreement also includes an option for additional volume.
The exact volumes and prices have not been revealed. According to Reuters, Tesla said that no company in the United States is capable of producing graphite with the specifications and capacity required for its production.
The announcement of the Tesla deal drove Syrah shares in Australia to a three-year high. Syrah Resources does not plan to make a final investment decision on the expansion of its Louisiana plant until January. Besides Tesla, Syrah is also negotiating long-term supply agreements with other customers. Syrah Resources announced the deal with the following tweet:
— Syrah Resources (@SyrahResources) December 22, 2021
The Vidalia plant is only the production facility in the USA where graphite is processed for anode production. Syrah Resources operates a mine for natural graphite in Balama in Mozambique. Graphite is also used in synthetic forms, but EV makers are increasingly looking to use natural graphite since synthetic graphite involves energy-intensive production processes and is produced using carbon from petroleum coke and coal tar. The production of synthetic graphite also involves a large carbon footprint with harmful emissions, as well as being expensive to make.
Around 70 per cent of all natural graphite is currently mined in China, and almost 100% is processed there. Other countries with known graphite deposits are Brazil and, as in this case, Mozambique. There is currently an exponential increase in demand for natural graphite for EVs that even outstrips the increasing demand seen by lithium and other elements such as nickel and cobalt.
As recently as the beginning of December, Tesla had asked the US government to waive tariffs on graphite imported from China because the material was not available in sufficient quantities outside China.
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