Sydney-based graphite producer Syrah Resources has declared force majeure at its Balama graphite mine in Mozambique, citing significant disruptions caused by post-election unrest in the region. The announcement, made on Thursday, has sent Syrah's shares (SYR.AX) plummeting to near five-year lows, underscoring the severe operational and financial impacts of the ongoing crisis.

The Balama mine, one of the world's few non-Chinese sources of graphite, has been unable to resume production since July. Initially, the halt was due to sufficient inventory levels and weak demand for graphite fines. However, escalating protests at the site, which began in late September, have now rendered operations untenable.

The unrest initially stemmed from grievances among local farmers over historical farmland resettlement issues. However, the situation worsened following Mozambique's contested general elections in October. The ruling Frelimo party, led by presidential candidate Daniel Chapo, extended its majority across provincial and national levels. Opposition parties have since alleged electoral fraud, triggering violent demonstrations across the country, including in major cities and key industrial sites like Balama.

On October 24, the Mozambique Constitutional Council announced the election results, but opposition parties continue to dispute the outcome. The widespread unrest has disrupted government operations, severely limiting provincial and district authorities' ability to address illegal protests. This has compounded challenges at Balama, where Syrah's efforts to resolve the standoff through dialogue and legal avenues have so far been unsuccessful.

Syrah's inability to operate throughout the fourth quarter has also triggered a default on its loans from the US International Development Finance Corporation (DFC) and the US Department of Energy (DOE). These loans include a $150 million facility from the DFC—the first of its kind for a graphite operation—and a $102 million loan from the DOE to support the expansion of Syrah’s Vidalia anode active material facility in the United States.

The Balama mine produced approximately 24,000 tonnes of natural graphite in the second quarter of 2024 but has since been operating on short, demand-driven production campaigns. With the ongoing unrest, Syrah's ability to replenish inventory and meet customer commitments has been severely compromised.

As the situation remains unresolved, Syrah is actively engaging with the US DFC and DOE to address the loan defaults while continuing to push for a resolution to the unrest in Mozambique. However, with no immediate end to the crisis in sight, the company faces mounting challenges both operationally and financially.

Syrah is an Australian Securities Exchange-listed industrial minerals and technology company, known for its flagship Balama Graphite Operation in Mozambique and a downstream Active Anode Material Facility in the United States. The company aims to be the global leader in supplying high-quality graphite and anode materials, collaborating closely with customers and the supply chain to deliver value in the battery and industrial markets.