UPDATE 1-Australia's Syrah Resources to slash Q4 graphite output, cites weak China demand

(Adds details on production cuts, context, share movement)

Sept 10 (Reuters) - Australian graphite miner Syrah Resources Ltd on Tuesday said it would slash fourth-quarter output, sending shares plunging more than 40%, as cuts in Chinese electric vehicles subsidies hurt demand for batteries using the material.

Syrah said it would reduce production in October-December to about 5,000 tonnes per month. It previously said fourth-quarter 2018 natural graphite output was 33,000 tonnes, sourced from its sole facility producing the material at Balama in Mozambique.

Shares in the Melbourne-headquartered company fell as much as 41% to A$0.415, a seven-and-a-half year low.

"Cuts in Chinese electric vehicle subsidies ... have impacted near term graphite demand growth for lithium-ion batteries in China," the company said in a statement.

Syrah also said it would conduct an immediate cost reduction review at its Balama operation in Mozambique.

Graphite is the only non-metal element that is a good conductor of electricity, and natural graphite is used for batteries, steelmaking and manufacturing brake linings, among other things

The sharp depreciation of the yuan and concern over further potential price decline is also putting pressure on pricing negotiations with Chinese customers, it said.

(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Tom Hogue and Kenneth Maxwell)