Shares of Syrah Resources Ltd (ASX: SYR), a prominent player in the Australian mining sector, experienced a significant surge today, defying broader market trends. At one point, the ASX 300-listed graphite producer’s stock climbed by as much as 18%, reaching 26.5 cents. Although the stock has since cooled slightly, it remains up 9%, trading at 24.5 cents in late afternoon.
This impressive jump is attributed to a major financial boost the company received from the US government. Syrah announced it had been awarded a US$165 million (approximately A$269 million) tax credit by the US Internal Revenue Service (IRS). This funding comes under the US Inflation Reduction Act’s Advanced Energy Project Tax Credit Program, known as the 48C Tax Credit. The tax credit will support the planned expansion of Syrah’s Vidalia Active Anode Material (AAM) facility in Louisiana, which could increase production capacity to 45,000 tonnes per annum (ktpa).
The 48C Tax Credit, part of a broader initiative set up by the American Recovery and Reinvestment Act of 2009, is designed to stimulate growth in critical materials processing and refining within the United States. It aligns with the energy and economic security objectives laid out in the US Inflation Reduction Act.
Syrah Resources was one of the few companies selected for this program, chosen from over 350 applicants during the second round of a US$6 billion funding allocation. The selection was made based on a recommendation from the US Department of Energy.
In addition to the tax credit, Syrah noted that the 48C Tax Credit is transferable and can be monetized by selling the credit to a third-party US federal taxpayer, providing further financial flexibility. However, the company must meet specific requirements to claim the tax credit, including adhering to prevailing wage and apprenticeship standards, as well as meeting certification milestones for the Vidalia facility within two years.
Syrah has also revealed that it is making solid progress on the Vidalia Further Expansion project. The company is advancing with transition engineering, permitting, and other preparatory activities, all in anticipation of a final investment decision (FID) by its Board. The timing of the FID will depend on the successful commercialization of the current 11.25ktpa AAM Vidalia facility and securing significant customer commitments, both of which are crucial for finalizing project financing.
Once the FID is made, Syrah will proceed with detailed engineering, procurement, and construction activities, following a structured timeline approved by the Board.
This recent tax credit and progress on its expansion project provide Syrah Resources with a strong foundation for future growth, making it a stock to watch in the coming months.
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