London, June 11th (Argus) - Australian mining company Syrah Resources stated that the proposed amendments to the mining law in Mozambique may affect its production at the Balama graphite mine. The new law is expected to be fully implemented in 2027.
The company told Argus: "The impact is still uncertain," and added that the outcome would depend on how the new regulations handle existing licenses and agreements.
Syrah said it is communicating through industry organizations and directly with the government, while emphasizing the stability protection clauses in its Balama contract. However, it did not explain how these clauses would function in the event of changes in financial or licensing terms.
Balama remains a key source of graphite outside China. Syrah has been promoting the construction of a non-Chinese cathode material supply chain, transporting raw materials from Mozambique to its US processing plant, and has signed supply agreements with downstream users, but progress has been delayed.
As buyers seek to reduce their reliance on China, this plan has become increasingly important, but China still dominates graphite processing.
After experiencing months of production and shipment disruptions, Balama has recently returned to stability. Since then, production and exports have increased, but prices remain under pressure. In the context of this mine supporting the expansion of supply outside China, any changes in licensing terms or royalties could further compress profit margins at this time.
African countries promote the value-added of local products
Mozambique's policy adjustments are part of a broader trend in resource-rich countries, with many sub-Saharan African countries pushing to retain more value locally, often by linking exports or licenses with local processing.
From the Democratic Republic of Congo to Zimbabwe, inspired by Indonesia's experience, these countries are imposing restrictions on raw material exports and requiring investment in refining and midstream processes.
The results vary. Indonesia expanded downstream capacity after implementing export restrictions, while gradually adjusting policy settings. In other countries, restrictions on electricity, logistics, and investment have slowed the construction of processing capacity.
In the graphite sector, capacity-building projects outside China are underway, but are still limited, including plans by companies such as NextSource in Saudi Arabia. Most downstream processing is still concentrated in China, and new supply chains are gradually developing.
For Syrah, which is simultaneously involved in upstream mining and downstream processing, changes in the regulatory framework in Mozambique may affect how Balama's production enters these supply chains.
