Syrah Resources (ASX:SYR) executives said the company exited 2025 with improved operating momentum at its Balama graphite mine in Mozambique, while continuing to work through customer qualification and policy-driven market uncertainty for its Vidalia active anode material facility in the United States.
Managing Director and CEO Shaun Verner told investors the December quarter featured “solid quarter of campaign production” at Balama, alongside active commercial efforts to meet “good ex-China demand” for break-bulk shipments of Balama fines and ongoing sales of coarse products into industrial markets. Verner was joined on the call by CFO Steve Wells and Executive General Manager of Strategy and Business Development Kieran Hira.
Balama production and sales rose, with focus on ex-China demand
Natural graphite sales totaled 29,000 tonnes, up 21% quarter-over-quarter. Verner said the company “essentially sold everything we produced in the quarter,” noting typical lead times required for transport to port and shipment.
Syrah completed two additional break-bulk shipments to Indonesia during the quarter, which management linked to demand for ex-China feedstock into the anode market. Verner also said Syrah is seeing an “ex-China pricing differential” for natural graphite as more non-Chinese manufacturing capacity develops, contributing to a bifurcation between China domestic pricing and ex-China pricing for natural graphite feedstock.
The company reported a weighted average sales price of $577 per tonne (CIF) for the quarter, up 2% from the same quarter last year but down compared with the prior quarter due to customer and product mix. C1 costs were $535 per tonne (FOB) during the operating period, and average freight was $74 per tonne. Verner said higher capacity utilization and increased volumes should support lower C1 costs over time and reiterated Balama’s potential to generate strong margins above 50% capacity utilization, particularly as Syrah achieves a premium for ex-China sales compared with domestic and FOB China prices.
Vidalia qualification continues amid shifting U.S. policy backdrop
At Vidalia, Verner said the team continues to build operating experience through small-batch production and ongoing customer qualification interactions. He characterized progress as “positive,” but acknowledged conversion to sales has been slower than the company would like.
Verner emphasized that Syrah does not see a product performance issue, stating, “There is no issue with our product specification or performance,” while noting that customers have continued to refine requirements as their own U.S. battery operations and product mixes mature.
Management pointed to U.S. policy as a key variable for near-term commercial progress. Verner said the removal of the Section 30D consumer tax credits in September 2025 led to a “marked reduction” in U.S. EV demand in the fourth quarter because sales had been pulled forward ahead of the change. He said greater certainty in the policy environment and resulting pricing and supply conditions—expected in the first quarter of 2026—will be important for the next steps at Vidalia.
Liquidity and lender discussions: cash ended December at $77 million
Wells outlined cash flow and liquidity, reporting the company started the quarter with $87 million in total cash across restricted and unrestricted balances and ended December with $77 million. Operating cash flow for the quarter was negative $18 million and included $13 million of receipts from natural graphite shipments.
Wells said cash outflow was higher than the September 2025 quarter, citing a delayed partial payment tied to a December break-bulk shipment, higher advisor costs related to the U.S. Department of Energy (DOE) and U.S. International Development Finance Corporation (DFC) loans, working capital buildup at Balama, and ongoing working capital draw at Vidalia during the low-production qualification period. He also noted the prior quarter benefited from receipt of a $12 million Section 45X U.S. tax credit for Vidalia.
During the quarter, Syrah received an $8.5 million disbursement from the DFC loan to fund working and sustaining capital at Balama. Net of $1.1 million of financing repayments and transaction costs, that resulted in $7 million of net proceeds from financing.
At the end of December, Syrah’s cash was split between $18 million of unrestricted cash and $59 million of restricted cash under the two loans. Wells said:
- $10 million of restricted cash was available to fund Balama operating and capital costs.
- $17 million of restricted cash was available to fund Vidalia costs.
- An additional $7 million of liquidity remained available under the DFC facility for tailings storage facility (TSF) funding, subject to meeting loan terms and conditions.
Wells also said interest payments on the DFC loan are deferred to May 2026, while DOE debt service obligations are deferred to 2027 under Syrah’s forbearance agreement with the DOE. He added that Syrah continues to work with both lenders amid market dynamics and loan requirements, including “a requirement for further funding by March 1,” and said this ties into the company’s previously announced strategic advisory process with Macquarie.
Market conditions: China overcapacity, tariffs, and AD/CVD seen as key catalysts
Verner described a market environment shaped by strong but volatile global EV demand and continued growth in China’s anode production, which he said approached almost 3 million tonnes in 2025. He attributed some demand growth to battery energy storage systems (BESS), including data center-related stationary storage.
He also outlined competitive pressures in China, including synthetic graphite anode material overcapacity, “destructive pricing behavior,” and pricing for lower-grade products that remains below estimated production costs in many cases. He said there are signs prices may be coming off sustained lows, supported by early evidence of capacity rationalization and BESS demand improving utilization.
In natural graphite and anode material supply chains, Verner said low anode material prices have kept precursor and feedstock margins low and that an increasing number of Chinese natural graphite feedstock and precursor suppliers are not operating due to poor margins and low demand.
Looking to U.S. policy, Verner said tariff and trade measures—including the anti-dumping and countervailing duties (AD/CVD) investigation and “combined preliminary tariff imposition of at least 105%”—could reshape supply dynamics. He said reduced Chinese exports to the U.S. have been evident and have been replaced in part by supply from Indonesia involving Chinese-owned facilities, which he said has been positive for Balama as a supplier to Indonesia.
Syrah said it is awaiting final AD/CVD determinations expected by the end of the first quarter of 2026. Verner said that if preliminary duties are finalized, they would be in place for a minimum of five years, potentially providing more stability and strengthening the competitive position for ex-China suppliers like Syrah.
Near-term priorities: shipments, qualification progress, and funding options
For the first half of 2026, Verner said Syrah plans to target campaign production to support increased natural graphite shipments to ex-China anode material customers, with a focus on break-bulk shipments for efficiency. He said the company will continue technical and process qualification efforts with Vidalia customers while monitoring policy developments that may influence purchasing decisions.
Verner also said the company is pursuing strategic partnering and funding options through a Macquarie-advised process, alongside ongoing efforts to restructure loans in light of geopolitical and policy developments affecting the graphite supply chain.
During the Q&A, Verner said policy would be the “greatest determinant” of anode material pricing and that supportive policy evolution could underpin improved pricing and stronger demand for Balama feedstock. Responding to a question on BESS, Verner said it was “still very early stage” for Syrah to outline a direct approach, noting most BESS cell supply currently comes from China and that cycle life requirements differ between natural and synthetic graphite, with U.S. battery manufacturers’ development decisions expected to be the key driver.
About Syrah Resources (ASX:SYR)
Syrah Resources Limited, together with its subsidiaries, engages in the exploration, evaluation, and development of mineral properties in Australia, China, Europe, India, the Americas, and internationally. It operates through Balama and Vidalia segments. The company’s flagship project is the Balama graphite and vanadium project located in Cabo Delgado Province, Mozambique. It also involved in the operation and expansion of the Vidalia active anode material facility, including the operation of a qualification facility; construction of the Vidalia Initial Expansion project; and evaluation of the Vidalia Further Expansion project.
Featured Stories
- Five stocks we like better than Syrah Resources
- How a Family Trust May Be Able To Help Preserve Your Wealth
- Do not delete, read immediately
- NEW LAW: Congress Approves Setup For Digital Dollar?
- “Fed Proof” Your Bank Account with THESE 4 Simple Steps
- A U.S. “birthright” claim worth trillions – activated quietly
