Tesla and Melbourne, Australia-based Syrah Resources Limited have signed a deal for the latter to supply the electric automaker with graphite from its plant in Vidalia, Louisiana, reports Bloomberg.
“Syrah Resources Limited announces that it has executed an offtake agreement with Tesla, Inc. to supply natural graphite Active Anode Material from its vertically integrated AAM production facility in Vidalia, USA,” stated the Australian company in a press release. No financial terms of the deal were disclosed.
According to Syrah, Tesla will “offtake the majority of the proposed initial expansion of AAM production capacity at Vidalia at a fixed price for an initial term of four years commencing from the achievement of a commercial production rate, subject to final qualification.”
Syrah’s Louisiana plant is set to process graphite from its Balama operation in Mozambique; the deal means this will be Tesla’s first U.S.-based source of graphite to build its battery cells.
Tesla will have an option to take additional graphite volume subject to the company expanding its capacity beyond “10 tons per annum of active anode material.”
Syrah’s Managing Director Shaun Verner told Bloomberg in an interview the deal will “help underpin a final investment decision on the production plant expected next month and help secure local supply.” The majority of graphite is produced in China.
In early December, Tesla asked the U.S. government to waive tariffs on graphite from China, arguing it was unable to secure supply from anywhere else.
Shares of Syrah Resources surged up 23% on the Tesla announcement, as of writing.
