Investors in ASX miner Syrah Resources Ltd (ASX: SYR) enjoyed a stellar end to last week with shares in the company rocketing on Friday.
Each share was trading at $0.365 at the close of business to mark an impressive 26% gain from Thursday's price of $0.29.
For some context, the S&P/ASX 200 Index (ASX: XJO) also had a strong day after notching up a 1.3% rise to reach record highs.
Curiously, Syrah didn't release any company-specific news to explain the sharp rise in its share price.
Instead, renewed investor interest appears to have been sparked by major developments out of the US.
Image source: Getty Images
What happened in America?
The Trump administration is set to introduce a substantial tariff on a battery material that plays a key role in the production of electric vehicles (EVs).
More specifically, the US Commerce Department announced a 93.5% tariff on Chinese graphite on Thursday.
According to reports from CNN, it accused the Asian nation of "dumping" the raw material at below market prices.
In turn, Chinese graphite imported into America could now be facing tariffs of about 160%, when other duties imposed on China are also included.
Key battery metal
Graphite is a critical material used in the production of lithium-ion batteries, serving as the primary component of the battery's anode.
Its high conductivity and stability make it essential for powering EVs.
According to the US Geological survey, China accounts for more than 40% of graphite imports into the US.
As such, the newly proposed tariffs could result in American EV manufacturers sourcing the material from other nations.
Conveniently, Syrah appears to be well-positioned to fill the gap.
Major global supplier
Syrah is regarded as a globally significant supplier of natural graphite and active anode material.
Its flagship operation is the Balama graphite mine in Mozambique, which is estimated to hold enough graphite for 50 years of production.
Syrah has also established a downstream processing facility in the US state of Louisiana to complement its mining operations.
Here, it manufactures active anode material for EV batteries, targeting customers in the US battery supply chain.
Notably, Syrah positions itself as the only vertically integrated producer of natural graphite and active anode material outside of China
Buyer beware
Although recent developments in the US appear favourable for Syrah's operations, investors should also weigh the risks that come with investing in the mining sector.
For instance, Syrah has faced significant challenges at its Balama graphite mine.
Late last year, the company declared force majeure due to civil unrest following a contested election in in Mozambique.
This incident halted mining operations and led to a default on the company's US government-backed loans.
It also caused its share price to tumble by 32%.
Syrah only resumed graphite production at Balama last month.
The mining industry is filled with risks, and there's no certainty that similar disruptions won't happen again in the future.
