- Syrah Resources is significantly reducing its graphite production following the falling price of the commodity and market instability
- The company will commence cost reduction at its Balama graphite project to compensate
- Syrah’s share price has taken a hit today, down 29.08 per cent to sit at $0.50 apiece
Syrah Resources has taken a major hit to its share price today, as it struggles with the unstable graphite market.
Shares in the company are currently down 29.08 per cent, fighting back from a low point of 37.6 per cent earlier this morning.
The weakened Chinese Yuan, due to trade tensions with the U.S., has effected the the price of spot natural flake graphite, resulting in its value depreciating.
This has made sales tough, according to Syrah. Additionally, it is expected prices may continue to fall heading into quarter four this year.
As a responsive measure, the company will reduce its graphite production to 5000 tonnes per month. This marks a significant change, as its Balama project is equipped to produce 350,000 tonnes of graphite annually.
While production is down the company will focus on improving its “product grade and consistency to drive our product differentiation,” according to CEO and Managing Director Shaun Verner.
Additionally, Syrah is looking to reduce costs at Balama. It advised a strategic and operational review for the company heading into 2020 will be conducted and relayed to shareholders next month.
The Balama project is located in Mozambique and has a 50 year expected lifespan. The product has a 95 to 98 per cent fixed carbon concentrate and has a range of flake sizes.
A resource estimate of the project places it as containing 147 million tonnes of graphite.
Prior to market instability, graphite saw a boom in sales due to its use in creating lithium-ion batteries, which are a staple of electric vehicles.
Shares in Syrah are currently worth $0.50 apiece, as of AEST 11:56 am.