“Off-take agreement with Tesla Inc. is conditional,” Syrah says
Published 10:47 am Wednesday, December 29, 2021
NATCHEZ — On Wednesday, Syrah Resources Limited released additional information regarding an off-take agreement they’ve inked with Tesla Inc. which states the agreement will only come to fruition if certain conditions are met.
The initial announcement of Syrah made Dec. 23 states they have executed an off-take agreement with Tesla Inc. to supply natural graphite Active Anode Material, or AAM, from its production facility in Vidalia, La. This material is commonly used to power lithium-ion batteries found in electric vehicles.
On Wednesday, Syrah released additional information which states the off-take obligation is conditional on both parties agreeing to the final specifications of AAM by Dec. 31, 2022, and achieving final qualification of AAM to Tesla’s satisfaction by no later than May 31, 2025.
The Agreement may also be terminated if production has not started by May 31, 2024, Syrah states. When these conditions are met, Tesla will off-take 8kt per annum of the proposed initial expansion of AAM production capacity at Vidalia, which is the majority of the plant’s planned production capacity of 10kt per annum.
Syrah officials said the “terms of the agreement have been the subject of extensive negotiations” as the company makes plans for a $137.5 million expansion of its Vidalia facility.
“The importance and materiality to Syrah of the agreement with Tesla is that it provides a foundation to proceed with the initial expansion of Vidalia’s production capacity,” Syrah officials said in a Wednesday news release. “The terms of the agreement including volume, pricing and term will assist Syrah in finalizing its investment decision in relation to Vidalia. Syrah plans to make a final investment decision for construction of this expanded facility in January 2022, subject to financing commitments.”
Syrah states the company is also 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.
Syrah Resources is an Australian technology company with a graphite mining operation in Mozambique. This graphite is milled and its AAM product created at Syrah’s lone United States facility located in Vidalia. Syrah’s vision is to be the world’s leading supplier of superior quality graphite and anode material products, working closely with customers and the supply chain to add value in battery and industrial markets, company officials said.