MAPUTO, Australian mining company Syrah Resources has announced plans to raise 110 million Australian dollars (about 88 million US dollars) to fund the development of its Balama graphite project in the northern Mozambican province of Cabo Delgado.

According to a statement from the company, it has extensively reviewed potential financing options and has decided that debt funding would be an expensive option. It therefore intends to raise equity by issuing 7.4 million new shares for 25 million Australian dollars and an entitlement offer to current shareholders to raise a further 85 million Australian dollars.

Syrah has turned to Swiss banks Credit Suisse and UBS to manage the capital raising exercise.

The Balama project is expected to produce an average of 365,000 tonnes of graphite per year over its first decade of operation.

Earlier this month, Syrah announced that it has signed a binding sales agreement for the supply of 30,000 tonnes of graphite in the first year of production to the Chinese company Jixi BTR Graphite Industrial, a wholly-owned subsidiary of Shenzhen BTR New Energy Materials (BTR). This is in addition to a contract signed last year under which it will provide 50,000 tonnes of graphite per year for five years to the Japanese group Marubeni.

The Balama project is still in its construction phase and is expected to begin production in the third quarter of this year. It holds a world-class deposit of graphite, along with vanadium, and Syrah calculates that Balama will become the world’s largest producer of high purity graphite, with sufficient reserves for 40 years of production.

Graphite is a form of carbon which is highly valued because of its properties as a conductor of electricity. It is also the basis for the miracle material graphene, which is the strongest material ever measured, with vast potential for use in the electronics industries. In addition, graphite is used in lithium batteries and for high-quality steel production.

Lithium batteries are used in everything from mobile phones to electric cars. With more and more car manufacturers announcing that they are planning to only produce either electric or hybrid cars within the next decade, demand for lithium, and hence also for graphite, is expected to grow rapidly.

Market research company Transparency Market Research estimates that the lithium-ion battery market is expected to grow globally from 30 billion USD in 2015 to over 75 billion USD by 2024.