(Reuters) – Syrah Resources Ltd said on Thursday it had signed a four-year deal to supply graphite anode materials to electric carmaker Tesla from its plant in the U.S. state of Louisiana, sending the Australian company‘s shares soaring 32%.
The deal with Tesla, the world’s most valuable automaker, comes at a time when carmakers globally are racing to secure supplies of components used in making electric vehicles.
Tesla will buy the majority of graphite output expected from the proposed expansion of capacity at the Syrah facility in Vidalia, with an option to purchase more.
Graphite is used in the lithium-ion batteries that power electric vehicles. Around 70% of all graphite comes from China, and there are few viable alternatives for batteries.
Tesla recently said no company in the United States was capable of producing graphite to the required specifications and capacity needed for its production.
Syrah said on Thursday the deal provides “a compelling foundation to proceed with the initial expansion of Vidalia’s production capacity.” The company is set to make a final investment decision for the project in January.
It also said it was advancing talks with other target customers to secure additional long-term purchase commitments for Vidalia.
The company’s shares were trading near a three-year high of A$1.75.
(Reporting by Harish Sridharan in Bengaluru; Editing by Aditya Soni)