Japanese battery giant Panasonic Energy has partnered with Quebec-based Nouveau Monde Graphite Inc. (NMG) to secure graphite supply for its North American operations on Monday, February 19.
Offtake agreement details
According to the press release, Panasonic Energy and NMG officially inked a seven-year offtake agreement for natural graphite supply to support the Japanese battery maker’s production in North America.
Panasonic will invest $25 million in the Canadian anode active material producer. Moreover, it aims to raise its investment with an additional $150 million with co-investors.
Before the official supply agreement, the two companies initially signed an MoU about the partnership in October 2022.
As per the deal, NMG will employ a “mine-to-battery-material” model using natural graphite from its Matawinie Mine in Quebec. It will then produce anode active materials at its Bécancour battery material factory.
Panasonic’s expansion push in North America
Panasonic Energy continues to expand its North American battery production to supply its electric automaker partners, particularly Tesla.
In that sense, it has been growing its use of domestically produced materials to establish a more sustainable supply chain.
The Biden-Harris Administration’s Inflation Reduction Act outlined the significance of local battery material sourcing in North America or other countries with US trade agreements. Failure to adhere to the stringent battery requirements will result in ineligibility to $7,500 federal tax credits in the US.
Potential benefits
NMG’s vertically integrated model will enable Panasonic Energy to establish a solid and reliable supply chain in North America.
It will also aid the Japanese battery giant’s efforts to halve its carbon footprint by 2031 from its 2022 level.
Moreover, it will enable Panasonic’s OEM partners to qualify for federal tax credits of up to $7,500 in the US.
In effect, Panasonic can further boost its battery production to support the growing demand for electric vehicles.
Panasonic’s investment in graphite is unsurprising, given Tesla’s growing interest in the said battery material. The Musk-led company has inked several purchase deals for graphite supply over the years. For instance, it tapped Melbourne-based Syrah Resources Ltd. in 2021 for battery-ready graphite supply.
