PERTH (miningweekly.com) – ASX-listed graphite miner Syrah Resources has been tapped for a grant of up to $220-million from the US Department of Energy (DoE) to support the potential expansion of its Vidalia active anode material (AAM) facility, in Louisiana.

Syrah is completing a definitive feasibility study (DFS) on the expansion of Vidalia’s production capacity to 45 000 t/y of AAM, inclusive of initial capacity of 11 250 t/y of AAM. Detailed engineering, procurement and construction phases will follow the DFS sequentially, subject to Syrah board approval and customer and financing commitments.

The company said on Thursday that if successfully concluded, the DoE grant would be highly attractive to Syrah and would fund a significant proportion of estimated capital costs for Vidalia’s expansion to a 45 000 t/y AAM production capacity.

Syrah will now work with the DoE’s Office of Manufacturing and Energy Supply Chains and the Office of Energy Efficiency and Renewable Energy, to negotiate and finalise a binding funding agreement for the grant, with Syrah required to satisfy certain conditions precedent before receiving the grant.

The DoE grant is a separate funding opportunity to the DoE’s Advanced Technology Vehicles Manufacturing (ATVM) loan programme, under which Syrah earlier this year secured a $102-million loan facility to support the expansion work at Vidalia.

Syrah told shareholders that it did not expect its binding ATVM loan to be affected by a binding funding agreement for the DoE grant.

Meanwhile, Syrah on Thursday also announced a non-binding memorandum of understanding (MoU) with global lithium-ion battery manufacturer, LG Energy Solutions, under which the two companies would evaluate natural graphite AAM supply from the Vidalia project.

Under the MoU, Syrah and LG Energy Solutions will continue testing and qualifying Vidalia AAM and use commercially reasonable efforts to finalise a binding offtake agreement for 2 000 t/y of AAM from Vidalia starting from 2025 and increasing to at least 10 000 t/y of AAM upon Vidalia’s expansion, by the end of December.

Syrah and LG Energy Solutions will also continue to cooperate to expand Vidalia AAM volumes and support the growing electric vehicle market.

Syrah on Thursday reported that the initial expansion of the Vidalia project’s capacity to 11 250 t/y progressed well during the quarter ended September, with detailed engineering on the project more than 89% complete following a final investment decision in February this year.

Construction of the Vidalia initial expansion project is progressing within the planned schedule and budget, the company said, noting that detailed engineering would be completed in the December 2022 quarter enabling required equipment fabrication and construction to progress in line with the schedule. Procurement activities for all key construction activities and equipment are substantially complete, with contracts for more than $130-million in total installed capital costs awarded including for major mechanical and equipment work packages. All remaining significant construction and equipment supply contracts will be awarded in the December 2022 quarter.

Construction activities in the December 2022 quarter will focus on completion of concrete foundations, mechanical and structural steel delivery, steel erection for permanent buildings, piping manufacturing, and delivery and installation of major equipment. Start of production of the 11 250 t/y AAM Vidalia facility is targeted in the September 2023 quarter with an 18-month ramp-up period to the full production rate.

Meanwhile, Syrah on Thursday reported that graphite production in the September quarter reached 38 000 t, down from the 44 000 t produced in the June quarter, as operations at the Balama project, in Mozambique, was impacted by industrial action in September.

Prior to this interruption, maximum finished product inventory positions owing to ongoing disruption in the global container shipping market continued to constrain Balama operating at a higher than 15 000-t-a-month production rate.

With work stoppage, disrupted access to site and out of caution for the safety of Syrah’s employees and contractors, Balama operations were halted in September and the company’s workforce temporarily moved from site. After quarter end, Balama prepared operations for restart, with employees and contractors returning to site and camp, and production and logistics movements recommencing.

The company on Thursday said that the processing facilities and other infrastructure have been assessed to be in good working order, and that full operational capability had been restored, with several logistical movements having been undertaken.

However, further illegal industrial action disrupted a full operational restart and limited logistics movements. Industrial action continues to be driven by a small contingent of local employees and contractors, Syrah told shareholders.

The company said that it is engaged with employee and contractor labour representatives and relevant Mozambique Government authorities to drive resolution of immediate issues, support the renewal of the company-level agreement and ensure that grievances are managed through the correct internal and/or regulatory channels.

“Syrah is working towards recommencing full Balama operations and production, and logistics movements, as soon as possible,” the miner said in a statement.