Syrah Resources signs MoU with Chinalco for graphite offtake deal

Syrah Resources has signed a Memorandum of Understanding for the offtake of 80,000 tonnes to 100,000 tonnes of graphite from its giant Balama Project in Mozambique by Chalieco, a member of the Chinalco Group.

Notably, this is close to half of the planned initial production of 220,000t from the project with the company expecting further offtake developments in other jurisdictions in the coming months.

Syrah and Chalieco will negotiate a legally binding offtake agreement within three months of signing the MoU, which also includes an amount of >98% V2O5 (vanadium) chemical powder or flake products to be determined.

This will firm up V2O5 volume requirements and also both graphite and V2O5 pricing.

Chalieco

Chalieco is an affiliate company of Aluminum Corporation of China (Chinalco), the world’s second largest alumina producer, the third largest primary aluminium provider and the fifth largest fabricated aluminium producer.

It intends to use the graphite mainly as a substitute for petroleum coke, anthracite and other forms of carbon used to manufacture aluminium cathode and anode blocks.

Anodes are large carbon blocks which are used to conduct electricity during the aluminium reduction process of aluminium oxide to aluminium metal.

Typically, green petroleum coke is used in anode blocks after being calcinated by an aluminium smelter.

About 560kg of anodes are consumed per tonne of aluminium produced. This requires about 450kg of green petroleum coke or 360kg of calcined petroleum coke for 1 ton of aluminium production.

Over 13 million tonnes a year of anodes are required for aluminium production resulting in over 8 million tonnes of calcined petroleum coke being used per annum.

Graphite has superior electrical conductive properties relative to petroleum coke and is also heat resistant due to its crystalline structure, making it deteriorates slower when in the presence of extreme heat such as in a smelter.

While graphite is more expensive than petroleum coke, substituting 10-15% of calcined petroleum coke with flake graphite fines has a material improvement in efficiency of aluminium smelters.

Chinalco also intends to use Balama graphite as cathode blocks in its aluminium smelters.

Cathode blocks line the bottoms and sides of processing tanks (called electrolysis cells) within aluminium smelters.