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Post Market Wrap | Syrah Resources secures US$107 million loan facility from US Department of Energy
Syrah Resources secures US$107 million loan facility from US Department of Energy
- Loan proceeds applied to expansion of Vidalia Active Anode Material processing facility
- Vidalia facility now fully funded, following completion of a $250 million capital raising in March 2022
- Active Anode material is an essential component of the supply chain for zero emission transportation solutions
- Syrah has first mover advantage in developing a large scale vertically integrated natural graphite AAM supply option in the USA market
- Offtake agreement to supply Active Anode Material to Tesla at a fixed price for 4 years points to strong global demand for graphite.
Syrah Resources Limited (Syrah or the Company) is an industrial minerals and technology business that seeks to become the world’s leading supplier of superior quality graphite anode material products. These products are essential components of the supply chain that adds value in battery and related industrial markets.
The Company’s flagship asset is the Balama Graphite Operation in Mozambique. This project covers an area of 106 square kilometres and has a mineral resource estimate of 1,422 million tonnes at 3 percent Total Graphitic Carbon cut-off grade. This estimate provides for a 50-year mine life. The Company also operates a large scale downstream Active Anode material facility at Vidalia, Louisiana in the US.
US$107 million US Department of Energy (DOE) loan
Syrah has finalised the terms of a Term Sheet for a US$107 million loan from the US DOE to accelerate the expansion of its Vidalia Active Anode Material (AAM) facility in Louisiana, USA. The loan terms are expected to settle by June 2022 and the first drawdown is scheduled for the September 2022 quarter. The loan term is for approximately 10 years and is based on long-dated US Treasury rates, implying an interest cost of slightly above 3 percent pa. The US government attaches significant strategic importance to the project under President Biden’s critical minerals strategy. The US DOE is committed to building a reliable domestic supply chain for zero emission transportation solutions. The strategy is specifically aimed at supporting the manufacture of advanced technology vehicles, including electric vehicles (EVs). The US government sees long-term economic value in growing the US workforce to support domestic battery manufacturing for EVs. Other recipients of funding under this loan program include Ford, Nissan and Tesla.
The Vidalia project us fully funded, following the completion of a $250 million capital raising by Syrah in March 2022. The construction contract for the Vidalia project has been awarded to the global engineering and construction services company Worley Group.
The downstream AAM facility positions Syrah as a first mover in developing a large scale vertically integrated natural graphite AAM supply option in the USA that is essential to accelerating the deployment of batteries to power EVs.
Looking Ahead
The significance of the US$107 million funding facility from the US Department of Energy is that it positions Syrah as a key supplier to the rapidly expanding EV and battery supply chain in the USA. The economic value of this manufacturing capability is leveraged by the offtake agreement with Tesla to supply natural graphite Active Anode Material from the vertically integrated production facility in Vidalia. Tesla will offtake most of the expanded AAM production capacity at a fixed price for an initial term of 4 years from the date of a commercial production rate. Tesla also has an option to offtake additional volume from the Vidalia plant, subject to Syrah expanding its capacity beyond 10,000 tonnes per annum of AAM.
Strong global demand for critical battery supply chain materials is likely to support the growth outlook for Syrah well into the future.
This Post Market Wrap is presented by Kodari Securities, written by Michael Kodari, CEO at KOSEC.
Money
Australia’s unemployment rate rises to 4.5 per cent
Australia’s unemployment rate rises to 4.5 per cent in September, prompting calls for potential Reserve Bank interest rate cut
Australia’s unemployment rate rises to 4.5 per cent in September, prompting calls for potential Reserve Bank interest rate cut
– Australia’s unemployment rate rose to 4.5% in September, the highest since November 2021.
– Economists note a cooling labour market, with fewer job ads and increased participation rate amid rising living costs.
Economists suggest that the Reserve Bank should consider another interest rate cut next month. BetaShares chief economist David Bassanese noted a slowdown in employment demand as the labour market struggles to accommodate job seekers.
The number of officially unemployed rose by 33,900 in September, while the employment count increased by 14,900. The labour force expanded by 48,800 people, resulting in a participation rate rise of 0.1 percentage points to 67 per cent, returning to July levels.
In trend terms, the unemployment rate remained steady at 4.3 per cent.
Labour Market
BDO chief economist Anders Magnusson stated that while the unemployment rate has increased, the labour market is cooling, not collapsing.
He pointed out that the 14,900 jobs added in September were slightly below the average for the past year.
A growing participation rate indicates that rising living costs are prompting more individuals to seek employment. Magnusson said the release confirms a gradual cooling of the labour market that keeps the Reserve Bank on track without necessitating immediate action.
He added that hiring activity is slowing, signalled by a 3.3 per cent drop in job advertisements in September, the largest monthly decrease since February 2024.
Despite this, he does not foresee a rate cut in November.
Money
Stocks rebound after Trump eases China trade tensions
Stocks rebound 600 points as Trump eases China trade tensions, signalling optimism in markets following Friday’s sell-off
Stocks rebound 600 points as Trump eases China trade tensions, signalling optimism in markets following Friday’s sell-off
– Stocks rose on Monday after Trump expressed optimism about trade relations with China.
– The Dow Jones gained 621 points, with significant increases in tech stocks and broad market recovery.
Oracle’s stock surged over 5%, with AMD and Nvidia seeing 1% and 3% increases, respectively. Broadcom’s stock jumped 10% following the announcement of a partnership with OpenAI.
Trump’s comments hinted that he might not impose a significant increase in tariffs on China, which had previously caused market turmoil. Vice President JD Vance similarly indicated a willingness to negotiate with China, while also asserting that the U.S. holds advantages in potential trade discussions.
Broader Recovery
Monday’s trading saw a positive shift with four out of five S&P 500 stocks rising, indicating widespread recovery. Small-cap stocks also made gains, with the Russell 2000 rising over 2.5%.
Market concerns persist, however, with a government shutdown continuing and a major payroll deadline approaching on October 15. Earnings reports from major financial institutions, including Citigroup and JPMorgan Chase, are expected this week, potentially impacting market sentiment.
Money
Australia revises superannuation tax plans for fairness
Australia revamps retirement tax with new thresholds and increased support for low-income earners amid political pressure
Australia revamps retirement tax with new thresholds and increased support for low-income earners amid political pressure
– Treasurer Jim Chalmers announced a 40% tax on retirement balances over $10 million, aiding low-income earners.
– The reform improves the Low Income Superannuation Tax Offset, helping 1.3 million Australians with higher annual payments.
The announcement comes after months of political and industry pressure and represents a major shift from the original policy.
It addresses prior criticisms related to indexation and taxation of unrealised capital gains.
Under the revised policy, balances between $3 million and $10 million will face a 30 percent concessional tax rate.
Both thresholds will now be indexed to inflation to prevent bracket creep affecting middle-income Australians.
The government has also removed taxes on unrealised capital gains, with changes applying solely to realised earnings from 2026.
“This has been a contentious policy,” Chalmers stated, indicating that it affects less than 0.5 percent of Australians, with about 80,000 anticipated to have over $3 million in superannuation next year.
Key Benefits
The reform package significantly improves the Low Income Superannuation Tax Offset (LISTO).
Annual payments will rise from $500 to $810, with an increased eligibility threshold from $37,000 to $45,000 by 2027.
This adjustment will assist approximately 1.3 million Australians, mainly benefiting women.
Eligible workers could gain around $15,000 in retirement, increasing LISTO eligibility to 3.1 million Australians.
The changes could generate about $1.6 billion in net revenue by 2028-29, a decrease from the original $2.5 billion projection due to enhanced LISTO benefits and extended implementation.
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