Battery materials and technology company NOVONIX (ASX:NVX,NASDAQ:NVX) has signed a binding offtake agreement for synthetic graphite material, the company said in a Monday (November 25) press release.
The agreement is with PowerCo, a battery company set up by Volkswagen (OTC Pink:VLKAF,FWB:VOW). The company is looking to boost its battery cell output, and has identified three gigafactory locations.
The first is in Salzgitter, Germany, the second is Valencia, Spain, and the third is in St. Thomas, Canada.
NOVONIX and PowerCo signed a non-exclusive testing and development agreement in March of this year.
Under the newly announced offtake agreement, NOVONIX will supply a minimum of 32,000 tonnes of synthetic graphite material to PowerCo over a five year term that is set to begin in 2027.
This arrangement comes after NOVONIX penned a binding offtake deal with automotive company Stellantis (NYSE:STLA) earlier this month. It is for a minimum of 86,250 tonnes of synthetic graphite material over a period of six years.
‘Offtake agreements with high-quality partners such as Stellantis solidify NOVONIX’s position as a leader in onshoring the supply chain of synthetic graphite and accelerating the adoption of clean energy,’ said CEO Dr. Chris Burns.
NOVONIX’s Riverside facility, located in Tennessee, US, is reportedly slated to become the first large-scale production site for high-performance synthetic graphite in North America. The company has been awarded a US$100 million grant from an office of the US Department of Energy, and also received a US$103 million investment tax credit.
The facility plans to grow output to 20,000 tonnes per year. Commercial production is set to begin in 2025.
NOVONIX is due to start commercial supply to PowerCo in 2027, but will have to achieve agreed-upon milestones first. These include mass production qualification and the satisfaction of certain compliance criteria.
The company will also have to secure financing commitments for production facilities.
Should NOVONIX fail to satisfy these requirements, PowerCo has the right to terminate the agreement.
Shares of NOVONIX were on the rise following the news, reaching as high as AU$0.98 on Monday.
Securities Disclosure: I, Gabrielle de la Cruz, hold no direct investment interest in any company mentioned in this article.