Graphite producer NextSource signs MoU with Posco to secure battery materials supply

The non-binding MoU envisages a possible strategic equity involvement by Posco in the miner, as well as the potential for a definitive offtake agreement for 30,000 tonnes per year of NextSource’s SuperFlake-brand graphite concentrate and 10,000-15,000 tpy of spherical graphite, over a 10-year period, the companies said.

The strategic partnership is in line with the global trend toward the diversification of supply with the intention of mitigating geopolitical risks, reducing reliance on China, and gaining financial incentives from government policies and programs such as the Inflation Reduction Act in the US.

China retains its dominant role in the production of graphite anode materials, but there is a growing trend among international producers to seek long-term supply agreements with producers of natural graphite outside China, to feed the growing battery value chain markets in Europe and North America.

One of these is Australia-based graphite miner Syrah Resources, which recently signed binding offtake agreements with a number of international participants in the battery value chain.

Syrah is looking to make sales of at least 100,000 tpy of fine graphite flake from 2026 onward, it recently said. These sales will be to third-party customers in battery supply chains outside China. The material will come from its Balama project in Mozambique.

The start date of the NextSource-Posco agreement was not disclosed because finalization will be subject to completion of certain regulatory and economic studies, Posco said.

NextSource, which is listed on the Toronto Stock Exchange, has started production at its Molo graphite mine in Madagascar. The junior miner expects to ramp up its phase 1 production plan to nameplate capacity of 17,000 tpy of graphite concentrate during the fourth quarter of this year, it said.

Molo’s graphite flake is large, which demands a price premium on the spot market over the fine flake that is most commonly used in battery anode production.

The NextSource announcement came with the miner also in talks with a number of potential offtake partners in the original equipment manufacturer (OEM) supply chain for the vehicle sector.

In July, it announced that it was working toward making a first shipment of SuperFlake graphite, to be used in the production of coated spherical purified graphite, to a Japanese company in the OEM supply chain that had asked for multi-tonne qualifying samples.

Also in July, it was working to fulfil a request to ship 1,500 tonnes of SuperFlake graphite for a battery cell test to a second Japanese company in the OEM supply chain.

The names of these partner companies were not disclosed.

NextSource planned to become a vertically integrated operation, using flake feedstock from Molo, at a battery anode facility (BAF) in Mauritius. It expected to commission the BAF in 2024, with initial production capacity for 3,600 tpy.

“We know it is important to end-customers – be they cell manufacturers, OEMs or anode processors – that you have your own mine source for security of supply, and to remain competitive on price,” Brent Nykoliation, executive vice president at NextSource, told Fastmarkets in July.

Natural graphite prices have been under pressure over the past year due to the increased availability of synthetic graphite, which has fallen in price.

Fastmarkets’ latest assessment of the price for graphite flake, 94% C, -100 mesh, fob China, was $550-606 per tonne on August 31, stable week on week but down by 15.62% compared with $670-700 per tonne on June 1.

The latest weekly assessment of the price for downstream graphite, spherical, 99.95% C, 15 microns, fob China, was $2,000-2,200 per tonne on August 31. This was unchanged since June 1 this year but down by 42.47% compared with the record high of $3,500-3,800 per tonne in March 2022.

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