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Highlights:
- Syrah Resources (ASX:SYR) shares dropped over 28% following the declaration of force majeure at its Mozambique graphite project.
- Civil unrest in Mozambique, driven by contested election results, has disrupted operations and access to the Balama project.
- The force majeure declaration impacts Syrah's production plans and recent agreements with POSCO and Samsung.
Syrah Resources (ASX:SYR) experienced a significant share price drop of over 28% on Thursday after declaring a force majeure at its Mozambique-based graphite project. The declaration comes amid escalating civil unrest in Mozambique, which has become a geopolitical flashpoint following contested election results in October.
The unrest has led to widespread violence and disruptions, prompting South32 (ASX:S32) to withdraw its guidance for its aluminium smelter in the country. The situation has deteriorated to the point where South Africa has increased border security to prevent spillover effects.
Syrah's force majeure declaration indicates that the company is unable to continue its production campaign at the Balama project for the December 2024 quarter. The company cited deteriorating conditions and further national government opposition protest actions as reasons for the halt in operations. Despite obtaining a restraining order against individuals organizing protests, government authorities have been unable to facilitate access to the project.
The unrest has also impacted Syrah's recent agreements, including a memorandum of understanding (MOU) with POSCO and a developing relationship with Samsung. The company's plans to produce battery anode graphite materials in Louisiana are now uncertain due to the disruptions in Mozambique.
The force majeure declaration underscores the challenges faced by Syrah Resources in navigating the complex and volatile political landscape in Mozambique. The company's efforts to resolve the situation through lawful and constructive dialogue have so far been unsuccessful, leaving the future of the Balama project in question.
