Syrah Resources Ltd (ASX:SYR) said on Monday that Tesla Inc (NASDAQ:TSLA) has rescinded its notice of intent to terminate a graphite offtake agreement after Syrah made progress in resolving an alleged supply default.
Syrah reported that Tesla accepted its demonstration that the natural graphite active anode material samples produced at the company’s Vidalia, Louisiana, plant were conforming. Following the announcement, shares of the Australian miner climbed 38%.
The supply arrangement dates to 2021, when the two parties agreed that Syrah would deliver 8,000 metric tons of graphite anode materials to Tesla from Vidalia. Tensions rose after Tesla alleged that samples from the facility were substandard, and issued a default notice in July 2025.
Following the default notice, the companies engaged in repeated negotiations over the past year. Syrah and Tesla extended the deadline to resolve the alleged default on four occasions since July, a reflection of the protracted effort to address the dispute.
In its statement, Syrah said Tesla accepted that it had demonstrated production of conforming samples of natural graphite active anode material, and as a result withdrew its earlier intent to terminate the offtake agreement. The announcement ended the immediate threat to the contractual relationship, at least for now.
The resolution affects participants in several segments of the market, including mining and materials suppliers, battery manufacturers, and electric vehicle producers that depend on stable anode material supply. The immediate market response was evident in Syrah’s share price reaction.
Context and implications
- Contractual terms established in 2021 called for Syrah to supply 8,000 metric tons of graphite anode materials to Tesla.
- Tesla issued a default notice in July 2025, citing concerns over sample quality from Syrah’s Vidalia plant.
- After multiple deadline extensions to resolve the dispute, Tesla accepted Syrah’s demonstration of conforming samples and withdrew its intent to terminate the agreement.
What remains uncertain
- The companies extended the resolution deadline four times since July, indicating the negotiations were lengthy and required repeated remediation steps.
- While the withdrawal of the termination intent addresses the immediate contractual risk, the long-term operational performance and ongoing quality assurance at the manufacturing site were not detailed in Syrah’s announcement.