On 15 February, Canadian anode material producer Nouveau Monde Graphite (hereinafter referred to as NMG) signed agreements with both Panasonic and General Motors. The agreements are binding offtake of cathode materials and investment in new capacity.
In the procurement section, the agreement is a parallel off-take agreement between NMG, Panasonic and General Motors. Panasonic will be supplied with 18,000 tonnes of graphite anode material per year for seven years after the Phase II Bécancour battery materials plant is brought into full production. The material will be used in Panasonic's cell manufacturing plants in Kansas and elsewhere. Similarly, NMG will supply 18,000 tonnes of anode material to GM. These materials will be used in the manufacture of batteries for Ultium Cells, a joint venture between GM and LG Energy Solution. The cells will be assembled into GM's electric vehicles. Purchase agreements with GM and Panasonic are based on price formulas linked to current prices, rather than fixed or current prices, in order to ensure relative stability in purchasing
In the investment section, both Panasonic and GM will invest in NMG in phases, with the first phase of the investment supporting the construction of NMG's natural graphite mine in Matawinie and its graphite refining plant in Bécancour. Panasonic will contribute US$25 million in the first phase to support NMG's operations, and has committed to investing US$150 million in conjunction with other potential investors based on subsequent construction. General Motors is contributing US$25 million in the first phase and has committed to make a US$150 million equity investment in subsequent phases.
Recently, including this natural graphite supply agreement, North American OEMs and battery makers have had a number of raw material supply agreements signed within North America/FTA countries. SMM believes that the raw material supply capacity of North America and Australia will be further explored and cultivated by downstream manufacturers and investors as the date of restriction on the proportion of the value of indigenous mineral components in the Inflation Reduction Act (IRA) gradually approaches.
On the premise of no major policy adjustments, the relevant industry chain will gradually mature, thus changing the current dependence on the Far East for the intermediate link of lithium-ion battery production. However, based on experience, SMM believes that in the early stage of the formation of the new lithium-ion battery industry chain, local products may be difficult to form a price advantage over imported products. This price gap even has the possibility of reversing the subsidies of the IRA Act. For example, the price of a car using imported battery cells may be lower than the price of a car using U.S.-made battery cells after enjoying subsidies. Therefore, it is not ruled out that the federal government will subsequently introduce more support for the local electric vehicle industry chain, or restrict the import of some of the electric core measures.
