Japanese battery-maker Panasonic Energy Co. Ltd. has signed a seven-year offtake agreement with Canada’s Nouveau Monde Graphite Inc. (NMG) to secure supply of natural graphite for operations in North America, Panasonic announced Feb. 15.
In addition, Panasonic Energy also plans to invest in NMG, starting with a payment of $25 million. The battery manufacturer said that it is looking to make an additional funding worth $150 million with co-investors in NMG, subject to a maximum ownership threshold agreed between the relevant parties. In another transaction, Japan’s Mitsui & Co. Ltd. plans to redeem and cancel its existing convertible note and subscribe to NMG’s shares.
Significance: The offtake agreement with NMG is part of Panasonic Energy’s strategy of increasing the local and sustainable sourcing of battery materials in North America, a move that is aligned with the requirements under the Inflation Reduction Act to qualify for federal tax credits. Panasonic Energy is expanding its electric vehicle battery production in North America, thanks to the growing demand from its customers including Tesla.
It can be recalled that the battery-maker had first signed a memorandum of understanding (MOU) with the Canadian anode active material supplier in October 2022, and subsequently advanced technological development and process optimization, in line with its specifications and quality standards for the development of an integrated graphite production in North America. To that end, the two companies have now officially entered into a supply agreement, Panasonic Energy said in a statement on Feb. 15.
According to Panasonic, NMG's carbon-neutral graphite material will not only strengthen its supply chain in North America, but also support the company’s goal of reducing its carbon footprint to 50% of its 2022 level by 2031.
Notably, under a "mine-to-battery-material" model, NMG plans to produce natural graphite from its Matawinie Mine project, which is located about 120 km north of Montréal, to produce anode active materials at its battery-material plant in Bécancour, Quebec. “This vertically integrated model positions NMG as an ideal partner to support Panasonic Energy’s plan to build a robust supply chain in North America,” the battery manufacturer said.
According to NMG’s website, the Metawinie Mine project is estimated to produce approximately 103,000 metric tons per annum of graphite concentrate, with a mine life of about 25 years. That said, NMG’s mining operations at the site will be all-electric, significantly contributing to building a sustainable extraction and subsequent supply chain. Notably, NMG refers to the Metawinie Mine project as its flagship graphite property.
The deepening engagement between the two companies comes months after the governments of Japan and Canada signed an MOU in September 2023 to strengthen their bilateral partnership, with a focus on building global battery supply chains.
Moreover, Panasonic’s offtake agreement with Canada’s NMG to procure graphite will contribute to de-risking the dependency on mainland China, which imposed graphite export restrictions from Dec. 1, 2023. Mainland China is the world’s largest producer and supplier of graphite, natural as well as synthetic, and processes more than 90% of graphite globally. Ever since these export curbs are imposed by mainland China, Japanese and South Korean battery manufacturers have been scrambling to identify alternate sources to secure graphite supplies for their respective operations.
