Like a lot of other posters have said, the result wasn't unexpected by those of us who follow SYR day to day. Given the market conditions, it isn't a good time to be a producer anywhere. As I'd previous said, the Chinese miners, AAM producers both natural and synthetic are hurting as well.
Short term we're in the doghouse which we already knew but mid to long I still believe we'll come up smelling like roses.
2 signed off-takes and 1 in the works with natural AAM producers and the possibility with more to come. My guess is POSCO in Korea and the other two in the US would be West Water Resources which I've been saying might be a possibility for the last 2 years and Urbix. The more to come would be LGES in Korea and not sure about the 3rd in the US or the 2 in Europe. I was just saying to a few of the TLG boys yesterday on another platform Europe should build dedicated AAM plants and source their feed stock elsewhere if they can't internally. Actually TLG might be 1 of the 2 European plants if the appeals against their mining permit is successful. The final permit (they needed 2) for their 19.5kt AAM plant has just been granted with no one appealing. Apparently Verner and Thomo are pals on LinkedIn.
BMI's latest demand forecast split between natural and synthetic on page 27 was interesting. The 35% for natural down from 40% reflects what is going on in China. The 40% forecast for 2040 would be indicative of the massive looming natural graphite deficit. 80% of prospective new mines will produce less than 40% fines. Unless they can sell their larger size flake, they can't expand. I think people are beginning to realise this. It is bad news for the industry.
The US and European markets won't want a lot of synthetic in their batteries because of ESG and also it lowers the battery density, hence range. I've been expecting it for a while now but I think the new ESG hot topic will be the amount of energy used. Just not whether the energy comes from a renewable source or not.
A massive increase in demand will start in the US and Europe from mid 2024 as they complete building the first of their large giga battery manufacturing facilities and begin ramping up. If some of the OEM's EV targets eg Ford/GM/VW come close to being met in 2025-26, they can't muck around.
Shaun answered one of the things I wasn't positive about. Looks like you can't have a DOE loan and grant on the same project. They're willing to forego the grant which was only go to pay for about 30%-40% of the upgrade and go for a loan as close to 100% as possible. They maybe able to leverage off the the 11.25kt plant which will be in operation by the time the decision is made. Don't expect dividends anytime soon.
The loan for Balama looks like it will go ahead. The hard part is the indicative approval. The rest is finalising the paper work.
Talk of building in the Middle East might be signalling to Europe they may have to throw a few shekels our way to gets us. Forget about talk about exporting AAM from Vidalia to Europe. The yanks would permanently cancel Shaun's visa and make him a persona non grata if he tried. Also a little matter of getting an export license.
Interesting they think they'll qualify for the full tax rebates even though the graphite comes from Moz. A FTA for graphite with Moz would be more reassuring.
I think the campaign runs are more about how to use the solar more effectively to reduce costs and better mange their workforce. With the batteries, at least they won't have to use diesel to power Balama at night. The plant has a lot of lights and the camp needs power as well.
Unfortunately the current situation isn't ideal for anyone. SYR is being squeezed between global geopolitical forces at play and can only deal with the cards they're delt. It's up to each investor whether they believe this is the calm before the storm.
SYR Price at posting:
74.5¢ Sentiment: Buy Disclosure: Held
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