Australian miner Syrah Resources to supply graphite for Tesla EVs

Melbourne-based mining company Syrah Resources has struck a landmark deal with Elon Musk’s Tesla to supply graphite, one of the key ingredients needed to make electric car batteries.

As the era of electric cars begins to dawn and demand for battery raw materials expected to surge in the coming years, car-makers worldwide are racing to secure supplies of minerals such as lithium, nickel and graphite.

News of Syrah Resources’ deal to supply Tesla, the world’s most valuable car-maker, sent the miner’s stock price soaring more than 30 per cent, to $1.78, on Thursday morning. Syrah’s shares were subsequently put in a trading halt after the ASX requested further details about the terms of the Tesla agreement.

Under the agreement, Tesla will buy the majority of graphite active anode output material expected from Syrah’s proposed expansion of its plant in the US state of Louisiana. The raw materials will come from Syrah’s Balama graphite mine in Mozambique

Syrah on Thursday said the deal provided a “compelling foundation” to proceed with the expansion works of the Louisiana production facility. The company is expected to make a final decision on the project in January.

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“Syrah is advancing commercial and technical engagement with other target customers to develop Vidalia active anode material for mass production and secure additional long-term purchase commitments for Vidalia,” the company said in a statement.

While electric vehicles (EVs) still account for just 3 per cent of new sales, uptake is strengthening in China, the United States and Europe, as governments begin setting deadlines to phase out petrol-engine vehicles and unleash huge stimulus packages targeting transport electrification.

Analysts are now projecting EVs will account for 40 per cent of vehicle sales by 2030, fuelling a five-fold rise in demand for supplies of some raw materials.