I first had a look at Syrah about three years ago, at that time...

I first had a look at Syrah about three years ago, at that time it looked to be a few years away from really taking off and at times since has remained promising despite their many headwinds. I have been prompted by their recent travails to have another look and on the face of it the company seems to be still on the verge, but somehow not quite, of success.

However, is the whole natural graphite story just a dream?
I am at a loss to understand why Syrah struggles so much to gain traction. I’m a rank amateur on the subject, there are people in this forum much more informed than me and I would welcome a sturdy critique and being put back in my box on the subject.

The forecast is that the supply / demand curve will shortly invert to a large shortage of supply and this has been the case for a few years now but like peak oil it seems to be something that never quite arrives, currently it is forecast to occur in 2024/2025. But there are a heap of startup companies with plans to fill that gap. I look at Renascor with a similar market cap to Syrah even though they haven’t built anything yet and see a company thriving on a dream which is easy to do when, unlike Syrah, there is currently no reality to bring them down. Syrah has never approached 50% of its production capacity and doesn’t look like rectifying that any time soon. Vidalia looks promising but that is quite a small proposition at the moment.
Is the company doomed to remain a plaything for the Chinese for the next few years?

Is the real future with synthetic graphite?
The recent Syrah update points to the convergence in China of natural and synthetic prices as being unrealistic and short term, and it may be politically motivated, but what if it is the new reality, that will change the dynamics completely. The conventional wisdom is that ESG concerns work against synthetic graphite but that concern might fall into second position behind strategic considerations.

Now Europe and the USA are getting serious about disrupting their graphite and battery supply chains with China everything will change!!
They might be prepared to pay a premium for strategically advantageous and environmentally friendly supplies. Dream on!!
Buying from Africa is not going to give the USA any strategic certainty of supply and there is no trade agreement with Mozambique. China could make an offer to buy Syrah, or any other company, that shareholders (including Australian Super) couldn’t refuse at any time and the Australian FIRB wouldn’t be interested in intervening. Or on the other hand they might not and just continue to play with the company.
The DOE in America realises this and seems to be backing local synthetic graphite production, ignoring ESG concerns. Anovion Technologies has a 40ktpa plant on the way with plans to increase production and Australian company Novonix plans to be manufacturing 30ktpa by 2025, ramping up to 150ktpa by 2030. Both companies are lining up grants and loans from DOE to get underway. I’m sure there will be more in the future.

Australian Super is quite a savvy investor, I’m happy with how they have managed my retirement funds, and the way things are going they will own nearly half of Syrah in a couple of years. They continue to back the company in a big way so I’m hoping they understand a lot more about the situation than me. They are not usually into investments for the super long term, they may be just waiting for the takeover opportunity.

For the present I’ll continue to sit by and watch the show.