Guess why this ASX battery materials share is surging 14% today

Investors have responded very positively to an announcement this morning.

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Man raising both his arms in the air with a piggy bank on his lap, symbolising a record high.

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Syrah Resources Ltd (ASX: SYR) shares are catching the eye on Friday.

In morning trade, the ASX battery materials share is up 14% to 69.5 cents.

Why is this ASX battery materials share jumping?

Investors have been snapping up the company's shares today after it announced a binding long-term offtake agreement with Posco Future M for Balama natural graphite product.

Posco Future M (previously Posco Chemical) is a major battery materials business, producing cathode active materials and active anode material (AAM).

According to the release, the six-year agreement is for up to 2kt per month (24kt) in the year following commissioning. After which, it will increase to from 2kt per month (24kt per annum) to 5kt per month (60kt per annum) at the option of Posco Future M with at least six months' notice, from the second year to the end of the term.

Management believes that the offtake agreement is an important development in the company's sales strategy. It will transition Balama natural graphite sales to a more geographically diversified and commercially aligned customer base, which it believes highlights Syrah's unique position in natural graphite and AAM supply outside of China.

More to come?

The deals may stop there. The ASX battery materials share revealed that there is increasing interest from battery manufacturers and auto OEMs in directly contracting sustainable upstream supply of ex-China natural graphite for anode processing partners.

It is currently negotiating further Balama natural graphite commercial supply arrangements with anode processing and downstream companies.

Things are starting to look up for this beaten down ASX battery materials share. Though, its shares still have a long way to go to get into positive territory on an annual basis.

Over the last 12 months, the Syrah share price is down approximately 65%.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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