Oct. 22, 2019 - Graphite miner Syrah Resources on Friday announced that some 30% of its staff at its Balama project, in Mozambique, will be made redundant, while executive management cuts will also be made.
Syrah told shareholders that the sudden and material drop in flake graphite prices during the third quarter of this year had prompted a structural review of the company, with the miner now looking to implement a series of "significant measures".
Syrah has also taken the decision to reduce its production in the fourth quarter of this year, and into 2020, allowing the natural graphite market to rebalance.
Graphite production during the fourth quarter will be dropped by around 5000 tonnes a month, while production for 2020 is currently planned at between 120,000 tonnes and 150,000 tonnes, subject to market conditions.
“In light of the deep structural changes currently occurring in the graphite market, Syrah has taken clear and disciplined action to temporarily reduce production volumes to allow the market to rebalance,” said MD and CEO Shaun Verner.
“We remain committed to the Balama asset and our long-term position in Mozambique. We will continue to operate Balama, the world’s best natural graphite asset, in a safe, sustainable and responsible manner to continue to build the sustainability of this operation.”
Verner noted that the restructure would result in some $22-million of annualised cost reduction at Balama, along with around $1.5-million in annual corporate overhead reduction.
The restructure is expected to cost some $1.5-million to implement, with the majority of the implementation to be completed by the end of the year.
“We have been operating for 21 months and have built a solid knowledge base of the Balama orebody, plant equipment performance and process control, with a strong operations management team embedding some significant improvements in recovery and product grade recently.
“We aim to continue to capitalise on our production improvement plan with the ability to quickly ramp up production in response to market conditions.”
Verner said that it was too early to gauge the pace of market reaction, however, he noted that the company would continue to actively review market conditions and manage production volumes accordingly.
“As operations stabilise at the lower volumes and at a different ramp-up profile, we will continue to review further cost reduction initiatives to continue to progress towards a cashflow positive position as quickly as possible, despite the challenges of operating at capacity utilization levels far below design.”