en.Wedoany.com Reported - U.S. electric vehicle manufacturer Tesla Inc. (NASDAQ: TSLA) withdrew its notice of intent to terminate the natural graphite supply agreement with Australian graphite producer Syrah Resources Ltd (ASX: SYR) on May 31, 2026, reaching a settlement before the final remediation deadline of June 1, 2026, for the breach of contract. Under the agreement signed in 2021, Syrah was to supply Tesla with a total of 8,000 metric tons of graphite anode materials from its active anode material (AAM) plant in Vidalia, Louisiana, over four years for use in manufacturing lithium-ion batteries for electric vehicles.
Syrah Resources is a vertically integrated graphite and battery anode material producer headquartered in Australia, founded in 2007, with operations covering Australia and international markets. The company operates two core assets: its flagship Balama Graphite Operation in Mozambique, responsible for the production, distribution, and sale of natural flake graphite; and an active anode material processing facility in Vidalia, Louisiana, with an annual design capacity of 11,250 tons. The Vidalia plant is the only vertically integrated anode material facility outside of China with large-scale production capabilities.
The dispute over the agreement began in June 2025, when Tesla issued a notice of default to Syrah Resources, alleging compliance issues with the quality of active anode material samples delivered from the Vidalia plant. Subsequently, the two companies reached agreements four times to extend the deadline for resolving the default, with the most recent adjustment extending the deadline from March 2026 to June 1, 2026. In its latest statement, Syrah Resources said Tesla had confirmed that the company was producing compliant active anode material samples and had made sufficient progress. However, the statement also clarified that if the active anode material from the Vidalia plant fails to pass final certification, Tesla retains its existing rights to terminate the supply agreement.
The supply agreement is tied to a loan of approximately $98 million that Syrah Resources received from the U.S. Department of Energy, secured by the Vidalia plant. Under a two-year forbearance agreement effective July 2025, the U.S. Department of Energy retains the right to terminate the forbearance agreement if the Tesla agreement is canceled. Additionally, Syrah holds another agreement to supply 7,000 tons of active anode material annually to electric vehicle manufacturer Lucid Group (NASDAQ: LCID). Following the announcement of Tesla's withdrawal of the termination notice, Syrah Resources' share price rose as high as A$0.140 in early trading, a gain of 41.4%, marking its best trading day performance since October 2023.
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