Tesla withdraws termination notice on graphite supply deal with Australia's Syrah
Tesla (NASDAQ:TSLA) has withdrawn its notice of intent to terminate a graphite supply agreement with Australia's Syrah Resources (ASX:SYR), the Australian miner announced on Monday. The resolution follows months of negotiations and multiple extensions to a deadline for resolving an alleged default.
The agreement, originally signed in 2021, stipulates that Syrah is to supply 8,000 metric tons of natural graphite active anode material (AAM) to the electric vehicle manufacturer over a four-year period. This material is intended to come from Syrah's Vidalia facility in Louisiana, United States.
The impasse between the two companies had led to four extensions of the deadline to resolve the alleged default. The most recent extension, agreed upon in March, set a new deadline for June 1.
Syrah stated to the Australian Securities Exchange (ASX) that Tesla now accepts the miner has demonstrated it is producing conforming AAM samples and has made sufficient progress. Gotrade News reported that Syrah's demonstration of conforming natural graphite samples satisfied Tesla's quality threshold, leading to the unwinding of the default process.
Despite the withdrawal of the termination notice, Tesla retains the right to terminate the agreement if Syrah fails to secure final qualification approval, according to Benzinga.
Graphite is a critical component in the production of lithium-ion battery cells, serving as the dominant anode material used by Tesla and other electric vehicle manufacturers. The resolution removes a significant uncertainty that had been associated with Syrah's battery anode pipeline.
Following the announcement, shares of Syrah Resources surged on the Australian Stock Exchange, with Benzinga reporting a rise of over 23% and Gotrade News noting a 38% increase. In contrast, Tesla's stock experienced a slight dip, slipping 1.43% to $435.79, as broader sentiment in the electric vehicle market remained mixed on the day, Gotrade News reported.