Nouveau Monde looks to Japan to further North American graphite anode ambitions

Recent agreements with Japanese companies will help Nouveau Monde Graphite become the biggest graphite producer in North America’s anode supply chain, Eric Desaulniers, founder, president and chief executive officer of the company told Fastmarkets

The Nouveau Monde Group, which is based in Canada, signed a memorandum of understanding in October with Japanese cell maker Panasonic concerning an offtake agreement for its active anode material (AAM).

AAM is produced from graphite flake. It is the final product of graphite processing, and it is used in lithium-ion batteries. The volumes involved in the agreement with Panasonic have not been disclosed, but Desaulniers says they will be “significant.”

“It will be the majority of the AAM proposition. At present our total expected AAM production is 43,000 tonnes per year,” Desaulniers said.

The implications of the agreement go beyond supplying AAM – they include Panasonic sharing its expertise with Nouveau Monde.

“The partnership means there will be real technical support often on site. This will bring us up to speed to the standards of a Tier 1 supplier. Panasonic is a highly prestigious producer that prides itself on its quality,” Desaulniers said.

Specifications

As the market develops, there is a lack of conformity among cell makers concerning the specifications of the AAM they require.

“The biggest challenge is that every customer wants something different, from, say, seven to 16 microns, so we need to be able to adapt to meet all the different demands,” Desaulniers said.

“We will sell coated and uncoated spherical graphite directly to cell makers, rather than through intermediaries. Whether it is coated or not is not an issue for us. But currently they all want coated,” Desaulniers said. “The main thing is, they want products of guaranteed quality they can sell to the automotive industry.”

The CEO does not expect existing producers to move to greater standardization in Japanese and South Korean markets, since both countries believe they already produce the best material.

The perspective is different among emerging cell makers seeking to make the move into commercial production.

“Since the Panasonic deal, I have noticed a change among new customers. While the Tier 1 cell makers want very specific products, the new makers don’t have so much time for lengthy research and development, and instead they are looking to find out what works,” he said.

“Our supplies will be completely consistent on a lot-by-lot basis as a result of this partnership,” Desaulniers added.

Some original equipment manufacturers (OEMs) have favored synthetic graphite over natural material because of its improved performance consistency. Achieving consistency is a key obstacle for natural graphite companies to overcome.

Supply chains

Synthetic graphite anode material is more expensive and has a higher carbon footprint than its natural graphite equivalent due to its energy-intensive production process.

The graphite market is dominated by China. But graphite is considered a critical material by the United States and the European Union, both of which are keen to decouple their supply chains from China.

“China is building its anode material capacity like crazy. And now North American cell makers need their own supply chain. We need to build up our own local market, be cost competitive in comparison to China, as well as sustainable and on time, and create value for our shareholders,” Desaulniers said.

Eric Desaulniers CEO Nouveau .jpg

Nouveau Monde plans to hold an important position in the provision of graphite for the battery market in North America.

“I believe we will be the largest anode material producer in North America. And if you want flake in significant quantities, you will need to buy it from us or bring it in sea containers from Brazil or Africa,” Desaulniers said.

Nouveau Monde will not be the only graphite producer in North America. Northern Graphite operates the Lac-des-Iles project in Canada and is developing other projects. Nouveau Monde will produce flake graphite, such as fine flake.

Fastmarkets’ weekly price assessment for graphite flake 94% C, -100 mesh, fob China was $830 per tonne on November 24, up from $760 per tonne at the start of the year.

But the company will focus its sales on downstream spherical graphite material, which carries a large premium compared with the fine flake feedstock.

Fastmarkets’ weekly price assessment for graphite spherical 99.95% C, 15 microns, fob China was $2,800-3,000 per tonne on November 24, down from $3,100-3,300 at the beginning of the year.

There is a considerable premium on top of the uncoated spherical graphite assessed by Fastmarkets to produce the coated AAM used in lithium-ion batteries.

Prospective graphite producers outside China have often struggled to secure the financing required to develop their own supply chains.

Earlier this month, Nouveau Monde announced a $50 million placement with Japanese trading company Mitsui & Co, UK-based Pallinghurst Bond and Canadian agency Investissement Québec.

The company plans to use the proceeds on a feasibility study into its planned integrated operations to develop an anode supply chain in North America that is independent of China.

“We are all worried about the geopolitical situation [with China], and we do need support to help make it happen. That is why the financing agreement with Mitsui is so important,” Desaulniers said.

Nouveau Monde is focused on the North American electric vehicle sector, but it has partnered with high-profile companies from Asia, such as Panasonic and Mitsui, rather than US businesses.

“It is not us who has pivoted to Asia, but this been the choice of the carmakers in the US, who are looking to East Asia. Japanese and South Korean companies are setting up in our backyard, and they are the world’s best producers,” Desaulniers said. “There aren’t North American battery companies ready to go into production yet.”

In the same way that North American OEMs have looked to Asia, Japanese and South Korean companies have shifted their focus to North America to move away from competition with China.

“Panasonic’s growth in North America will be achieved through the localization of their supply chains and through decarbonization. Our partnership means they can fulfill that and decouple from China,” Desaulniers said. “We have seen a big shift from Japanese and South Korean companies to place their attention on North America.”

Project developments

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NMG Bécancour rendering.jpg

The company has two upstream projects in Quebec, Canada. The final investment decision for Phase 2 of the Matawinie mine and Bécancour battery material plant should be made in the first half of 2023, and then it will take 28 months to go into production.

“We should be in commercial production in mid-2025 with our mine and offtake agreement,” Desaulniers said.

Meanwhile, the Lac Guéret project is being redesigned, with targeted expansion (Phase 3) following the commercial launch of Phase 2.

Nouveau Monde and Mason Graphite entered into a joint venture agreement for the development and operation of Mason Graphite’s Lac Guéret graphite concentrate property in May 2022.

The company reported that the Lac Guéret property has potential production capacity of at least 250,000 tpy of high-purity flake graphite.

The prospect of large volumes of graphite flake coming onto the market does not raise concerns about over-supply for the company. Instead, Nouveau Monde intends to increase its offer volumes when the market can support them.

“We will not be selling in bulk to China or growing to become too big too early. Instead, we will grow our capacity as the market develops with offtake agreements and with our customers in the US,” Desaulniers said.

To keep up to date with the latest news in the graphite market, visit our dedicated graphite market page.

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