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VIDALIA, La. — Syrah Resources announced they have executed a binding offtake agreement with Tesla Inc. to supply Active Anode Material produced at its Vidalia facility.

The Active Anode Material, AAM, is used to power lithium-ion batteries found in electric vehicles. Syrah Resources moves graphite from a mining operation in Mozambique to produce AAM at its lone United States production facility located in Vidalia.

Company officials said they aim to replace China as the leading supplier of AAM.

This agreement affirms Syrah’s plan to undergo a $137.5 million expansion, taking its production from a start-up to commercial level.

According to Wednesday’s announcement, Tesla will offtake the majority of the proposed initial expansion of AAM production capacity at Vidalia at a fixed price for an initial term of four years beginning when Syrah achieves a commercial production rate. Tesla also has an option to offtake additional volume from Vidalia subject to Syrah expanding its capacity beyond the initial project.

“The Agreement provides a compelling foundation to proceed with the initial expansion of Vidalia’s production capacity,” company officials said in a news release. “Syrah plans to make a final investment decision for construction of this expanded facility in January 2022, subject to financing commitments. Syrah is advancing commercial and technical engagement with other target customers to develop Vidalia AAM for mass production and secure additional long-term purchase commitments for Vidalia.”