Whopping US taxes on Chinese graphite imports put Syrah right back in the game

Syrah (SYR), the integrated graphite/anode producer and an AustralianSuper favourite, stands as the ASX stock to benefit most from the whirlwind of protectionist actions against China coming out of the White House.

The White House rounded on China in a big way on the graphite front last month. Not through tariffs, which have been taking up much of the conversation, but with good old-fashioned anti-dumping duties.

It whacked a duty of 93.5% on imports of Chinese activated anode material (AAM) in a preliminary measure.

When combined with a countervailing duty determination of 11.5%, an existing 25% tariff, and a Trump imposed 30% tariff, the get-out-of-here moves on the Chinese imports amount to a punitive 160%.

As analysis by Jarden put it, end consumers of AMM now face a choice between up to a 160% duty on Chinese AAM or simply purchasing production from (Syrah’s) Vidalia (due to produce its first commercial AAM later this year and planned to be four times bigger than its current rated capacity).

“China controls the global AAM supply chain and can either flood the market with non-commercial product or use export licence controls to restrict supply - an easy way to weaponise the lithium-ion battery industry,” Jarden said.

“The US has acknowledged this and has moved to foster the ex-China AAM industry. The minimum 105% wall against Chinese AAM fundamentally alters procurement economics for North American battery manufacturers.

“The benefits to SYR are numerous - Vidalia becomes a cost competitive alternative, removing the previous price disadvantage, and remains a key strategic asset with immediate scalability to 45ktpa capacity (from 11.25ktpa).”

In addition, Jarden said Syrah’s Balama graphite mine in Mozambique has immense latent capacity to supply other ex-China AAM plants such as the existing offtake agreement with Korea’s POSCO.

All in all, Jarden labelled the White House action in the graphite space as a “seismic and durable shift in the market construct”.

For a few days at least, the market agreed, pushing Syrah up strongly to 43c a share, which was ahead of Jarden’s valuation on the stock of 40c. Syrah struck while the iron was hot and raised $70 million at 26c a share.

The stock has subsequently weakened to 29c, presumably because the market is waiting for Syrah to confirm commercial production at Vidalia and further along, rising production at Balama in support of the Vidalia and others seeking non-China supplies.

KINGSLAND:

The rest of the non-China world is as wary as the Americans are of letting the Chinese control lithium-ion batteries and by extension, their electric vehicle car industries and batteries for renewable energy storage.

So new sources of a key battery material like graphite will increasingly be sought as the non-China world gets busy building out its own supply chains. America’s recent actions in the graphite space give it first-mover status.

But others will follow, which is why there has been a noticeable improvement in sentiment towards the ASX graphite juniors since the US anti-dumping measure on AAM was announced last month.

One of those to benefit has been Kingsland Minerals (KNG) which has risen 33% since the US made its move to 16c. The company owns the large Leliyn graphite deposit 250km south of Darwin.

Having said that, metallurgical work by Kingsland has confirmed the potential for Leliyn to host a virtual cornucopia of strategic metals, making it somewhat of an ETF in the critical minerals space.

This week Kingsland reported that met work had provided early encouragement that by-product gallium could be produced from the Leliyn orebody. That follows on from the prospect of Leliyn also having titanium by-product potential.

Kingsland already has a compliant exploration target on the gallium of 3,800-4,875 tonnes of gallium trioxide. Doesn’t sound like much but it has to be remembered that the current price for high purity gallium is $US1,089/kg.

And if it can be floated off along with the titanium as a by-product to get to the graphite, there is plenty of incentive to put in the effort to confirm a processing pathway to produce a project-boosting gallium concentrate revenue stream.

Gallium is of course one of the strategic metals (it has high-end civilian and defense applications in semiconductors and optical-electronic devices) that China, in its tit-for-tat tariff war, banned from being exported to the US.

While the gallium and titanium legs to the Leliyn story pan out, Kingsland is close to releasing its scoping study into Leliyn as a Tier 1 graphite supplier. It is the first-pass economic assessment that the government departments around the world charged with building out critical metals supply chain independence have been waiting on.

CENTAURUS:

The nickel price has been on the slide for a couple of years now due to the surge in production from Indonesia’s laterite ores.

The CY2023 average of $21,487/t was replaced by the CY2024 average of $US16,815/t. And in the first half this year the price averaged $US15,369/t.

The ever-volatile metal this week was quoted lower again at $15,264/t ($US6.92/lb).

So you would think there hasn’t been much to talk about. But the funny thing is that the straw hats in winter types are wondering if the stainless steel and battery material is having its lithium moment i.e. has it bottomed.

The chatter has largely been driven by Indonesian government environmental action against one of the biggest producers and reports that China has been stockpiling the metal.

Given the Indonesian industry is controlled by the Chinese, it is being wondered if Beijing is getting twitchy about further action by Indonesian authorities against the industry on environmental grounds, and what the Chinese themselves would call anti-involution measures.

To be sure, the chatter has not moved nickel prices in a significant way just yet. But like the case with lithium in recent days, any truth to the chatter could prove explosive.

Having said that, none of that mattered much to ASX-listed Centaurus which is pulling in $23 million at 36c a share to get to a final decision point in the first half of CY2026 on its 22,600tpa Jaguar nickel project in Brazil.

Jaguar is of the sulphide type and has clear environmental advantages over the Indonesian stuff. It also competes well on the cost front with study work pointing to AISC costs of $US4.43/lb.

That places Jaguar in the first quartile of all types of nickel production.

The costs and green credentials are the main selling points in a strategic partnering process Centaurus says is well advanced.