Syrah Resources receives major US backing for Balama graphite project in Mozambique
Syrah Resources’ (ASX: SYR) Balama graphite operation in Mozambique has received significant US funding support on the back of its designation as a critical component of the global energy transition.
Balama has been allocated approximately $227 million in financial backing through a United States International Development Finance Corporation (DFC) loan facility, the first such funding to a graphite operation.
Syrah subsidiary Twigg Exploration and Mining has signed binding documentation with the DFC to support Balama.
Essential supply component
DFC acting vice president of infrastructure Danielle Montgomery said Balama is considered an essential part of supply chain development for the global energy transition.
“This is a highly significant transaction that will support more diverse, resilient and sustainable critical mineral supply chains and bolster investment in Africa,” Ms Montgomery said.
“DFC’s loan demonstrates the commitment of the US to support the transition to clean energy technology, grow economic opportunity and uphold high labour and environmental standards.”
Conditional commitment
Execution of the DFC loan agreement follows a conditional loan commitment from the corporation to Twigg in September 2023.
An initial disbursement of approximately $111m is expected to be completed in November 2024.
The DFC loan will fund various capital requirements including working and sustaining operational capital, current and future expansion of Balama’s tailings storage facility and feasibility studies for the development of Balama’s vanadium resource.
Three-year process
Syrah chief executive officer Shaun Verner said that the execution of the DFC loan agreement follows a three-year process that included detailed market, technical, legal, environmental and social due diligence on Balama, Twigg and Syrah, in addition to extensive negotiation of loan documentation.
“The execution of a binding loan agreement with the DFC for Twigg further demonstrates the importance of Balama, which is the largest integrated graphite mining and processing operation globally, to the critical minerals strategy of the US,” he said.
“Together with the US Department of Energy loan for Syrah’s downstream business, the DFC loan positions Syrah as a strategic partner in bolstering supply chain security for critical minerals required for the electric vehicle and energy transition in the US.”
“The DFC loan will provide Twigg with the capital to preserve optionality with respect to Balama’s operating strategy and facilitate an orderly transition to a more sustainable level of capacity utilisation, supported by a more diverse customer base.”