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Syrah Resources (ASX:SYR) plummeted more than 28% on Thursday as the company declared a force majeure at its Mozambique-based graphite play.
As if the world needed any more drama, Mozambique has become (or, remains) a geopolitical flashpoint. On Wednesday, former BHP spin-out South32 (ASX:S32) flagged ongoing issues in the country as civil unrest spreads.
Force Majeures rarely end well, but it’s early days. That said, South Africa has stepped up border security where the threat of spillover from Mozambican exists.
Violence in the streets has been building since October when the country hosted elections that were, perhaps typical of more unstable nations, ultimately contested.
In a turn of events that’s undeniably of our modern era, it’s claims of election fraud that are driving the unrest (as well as historical political and ethnic grievances). Thank god this doesn’t happen in more developed nations…
The situation in Mozambique forced South32 to pull forecasts on guidance for its aluminium smelter in the country – but now the far-smaller Syrah has straight up declared the project, more or less, a write-off.
Force majeure, for the uninitiated, is a fancy legal way of saying ‘forces well beyond our control nobody could have predicted have forced us to drop this asset.’
“With conditions continuing to deteriorate across Mozambique and further National Government opposition protest actions recently announced, Syrah is unable to undertake a production campaign at Balama in the December 2024 quarter that is required to replenish finished product inventory, and for customer sales,” Syrah wrote on Thursday.
“Consequently, force majeure is declared under the mining agreement.”
The company also noted that ‘government authorities’ have been unable to facilitate access to the project, even after Syrah won a restraining order against ‘individuals’ organising a protest.
This sounds a lot like the company is being blocked access to its project – it stopped short of saying this, but noted that ‘a small group of farmers with historical resettlement grievances’ were causing strife.
It’s bad timing – Syrah recently inked an MOU with POSCO; has been building a relationship with Samsung, and was set to start producing battery anode graphite materials in Louisiana.
The situation in Mozambique now upends all of that.
SYR last traded at 19cps.
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