This research note discusses Glencore's interest in acquiring Syrah Resources, known for its significant vanadium and flake graphite production capabilities. Syrah plans to produce 5,000 tonnes per annum (tpa) of vanadium and 200,000 tpa of flake graphite, targeting steel and battery markets, with startup expected in 2016. The analysis highlights the growing importance of supply security in the vanadium industry amidst rising global demand for stronger steel and battery technology.

1. Glencore / Syrah Resources research note
10 July 2014
Simon Moores, Independent Consultant
Niche, critical & industrial minerals and metals

2. This research note has no affiliation with the companies
discussed and is to provide independent analysis on the
companies and industries mentioned. The author/authors hold no
financial interests or shares in any companies mentioned.
All content is free for public use and quotable providing original
source is cited.
Simon Moores, Independent Consultant
Niche, critical & industrial minerals and metals

3. Story: Rumours that Glencore have approached Syrah Resources
for a possible takeover
 Based: Switzerland
 HQ: UK
 Business: Commodity
Trading & Mining
 Producer and trader of
vanadium
 Based: Australia
 Business: Resource
Exploration & Mine
Development
 Owns the world’s largest
vanadium and graphite
deposit in Mozambique
Vanadium

4. Glencore strategy brief:
As a producer of vanadium, Glencore is seeking supply security and market dominance with the few
new suppliers that are coming on-stream . The market is presently dominated by one Russian and two
major Chinese producers.
Glencore has secured an offtake agreement with Largo Resources which expects first production from
its Maracas Vanadium Project in Brazil imminently.
Part or full ownership of Syrah Resources for its vanadium production would be the rationale. The
significant volumes of flake graphite produced would be a bonus but could also be sold as a
recarburizer to Glencore’s customers.
Supply security is an issue that is rising to prominence, particularly in the vanadium industry which has
one of the most fragile supply structures of all niche minerals and metals.
Vanadium is part of Glencore’s larger commodities business which is focused on steel raw materials, oil,
coal and agricultural commodities such as grain, cotton and sugar.
• Vanadium - driver behind the rumour
• Syrah plans to produce 5,000 tpa of vanadium a year at initial capacity
• Glencore is one of the world’s largest producers of vanadium

5. Syrah Resources brief:
Syrah Resources owns the world’s largest flake graphite deposit which also hosts significant volumes of
vanadium.
The Balama Deposit in north Mozambique hosts 1.15bn tonnes of vanadium (grade: 0.23% V2O5) flake
graphite (grade: 10.2% C) to JORC regulations; contained 117m tonnes.
Syrah plans to initially produce 5,000 tpa ramping up to 10,000 tpa. It will look to produce 98.5% V2O5
for steel markets and 99.9% V2O5 for batteries.
Its flake graphite output, seen as a by-product by the company, will exceed 200,000 tpa should
vanadium production total 5,000 tpa. The company is targeting steel refractory, steel recarburzier and
battery markets with its flake product.
Expected start up is 2016.
• Vanadium expected output: 5,000 tpa
• Flake graphite expected output: 200,000 tpa
• Steel and battery markets targeted for both products

6. Syrah Resources | Production comparison
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Vanadium (tonnes)
Global Output in 2013 Syrah expected output in 2016
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
Flake graphite (tonnes)
Global output in 2013 Syrah expected output in 2016
• Syrah’s output will equate to
7% of the world’s raw material
output of vanadium in 2013
• Syrah’s output will equate to
53% of the world’s supply in
2013

7. What is vanadium?
Vanadium is a metal used as a strengthening agent in steel production and to
produce a vast array of alloys and chemicals.
Vanadium is finding solid growth in the steel sector due to the increased demand
for stronger, lighter advanced steel materials in anything from construction rebar
to automobiles and airplanes.
Vanadium is also finding new markets in batteries. The vanadium flow battery is
widely seen as the best technology for stationary or off-grid storage. This battery
technology could provide back up power for cities or make renewable energy
more manageable with the ability to store energy from the intermittent power
sources.
• Metal used as a steel strengthen
• New emerging markets: Large, stationary batteries
• Possible upside for renewable energy storage

8. Where is vanadium produced?
China, 53%
Russia ,
10%
South
Africa , 18%
Europe , 8%
North
America,
6%
Other, 5%
Source: TTP Squared

9. Where is vanadium used?
Steel , 90%
Titanium /
super alloys,
4%
Chemicals,
3%
Other, 3%
Source: TTP Squared

10. What is flake graphite?
Flake graphite is the most commonly mined form of natural graphite.
It is predominately mined in China with Brazil being the second largest producer.
In 2013, China produced 60% of the world’s 375,000 tonnes of flake graphite
output but in 2014 the major producing areas of Heilongjiang and Shandong
provinces started consolidation.
There have been no flake graphite mines established outside of China since the
mid-1980s.
The primary use for flake graphite is in steel refractories which accounts for over
half of consumption. Battery demand has risen to prominence since 2009 with the
increased production of electric vehicles and a ramp up in portable batteries for
smart phones, tablets and laptops. Lithium-ion battery technology is driving
interest the space and new flake graphite demand, while refractories remain the
staple market.
• One of three natural, mined graphite products
• Production dominated by China; consolidation occurring
• Like vanadium, used in steel and batteries

11. Where is flake graphite produced?
China
59%
Brazil
23%
India
7%
Canada
4%
Other
7%
Source: Simon Moores

12. Where is flake graphite used?
Source: Simon Moores
Refractories ,
52%
Batteries,
22%
Further
processed
products ,
20%
Other , 6%

13. Profile | Simon Moores
• Independent consultant and analyst
• Specialising in niche, critical and industrial minerals and
metals
• Graphite, lithium, vanadium, cobalt, fluorspar, mineral
sands
• Tracking supply, demand and prices in the industry
since 2006 when he joined Industrial Minerals
Email: sdmoores@yahoo.co.uk
Twitter: www.twitter.com/sdmoores (@sdmoores)
Linked In: uk.linkedin.com/pub/simon-moores/18/614/b06/
• Visited numerous mines incl: SQM (Lithium in Chile), Black Dragon Graphite (Graphite,
China), American Vanadium (Vanadium, USA), Western Lithium (Lithium, USA),
Rockwood Lithium (Lithium, USA), Ashapura (Bauxite, Kaolin, Bentonite, India), Tata
Chemicals (Soda Ash, India & UK)
• Interviewed by international press incl: The New York Times with regards to rare-earths
after he broke the story that China blocked exports to Japan in 2009, London’s The
Times, The Australian, Reuters, Bloomberg, Italy’s La Stampa