Graphite miner Syrah hits speed bump over Louisiana beneficiation plant

2018-01-11

Jan. 10, 2018 - Heavily shorted graphite miner Syrah Resources has hit speed bump in its plans to develop a beneficiation plant in Louisiana that would give it better access to lucrative battery markets.

Syrah had obtained a lease to build the beneficiation plant near Port Manchac on the outskirts of New Orleans, but the port's governing body (the South Tangipahoa Parish Port Commission) terminated that lease on Tuesday morning after local residents raised concerns about the facility's potential to affect air and water quality.

Syrah said it would review alternative locations for the plant within the state of Louisiana, and said several other options had been considered before Port Manchac was selected.

"We are quite confident that despite the decision today, we will be successful in finding a home for the project in the state of Louisiana," said Paul Jahn, Syrah's chief operating officer for the beneficiation plant project.

Syrah's Balama mine in Mozambique produces flake graphite, which has traditionally been sold to refractories, steel mills and into the lubricants industry, but in recent years demand has emerged from lithium-ion battery producers.

Those battery manufacturers typically want graphite in a beneficiated form, often described as coated spherical graphite, and the Louisiana plant is designed to allow Syrah to sell directly into such higher-margin markets, rather than allowing intermediaries to capture the margin arbitrage between flake and spherical graphite.

Syrah told the ASX it did not expect the lease termination would delay development of a beneficiation plant.

'The company will continue'

"The majority of the development, engineering, environmental and commercial work completed to date will be transferable, so the company will continue to pursue the objective of first milled material in (the second quarter of 2018) and first commercial material in the (fourth quarter of 2018)," the company said in a statement.

Termination of the lease comes after a strong five months for Syrah in which it completed construction and commenced production at Balama, signed new graphite sales contracts and shipped its first ever tonnes to customers.