First Phosphate Corp. (CSE:PHOS) announced it has struck a major new agreement with American Battery Factory Inc to support the production of lithium iron phosphate (LFP) cathode active material (CAM) in North America.
The two companies will collaborate on the production of up to 40,000 tonnes of annual fully North American manufactured LFP CAM.
Both First Phosphate and ABF have agreed to mutually beneficial arrangements that extend until 2028. However, the final details of their customer-supplier relationship will be defined in a definitive agreement.
Shares of First Phosphate spiked as much as 23% following the announcement before settling around 10% higher at C$0.38 in the afternoon.
That agreement will be established once both companies successfully source an established LFP technology partner to assist in servicing ABF's LFP CAM production requirements in North America.
Under the agreement, First Phosphate is responsible for sourcing and supplying local raw materials, managing logistics for LFP CAM production, and integrating its raw materials into the CAM production process. ABF, on the other hand, anticipates sustained annual demand for LFP CAM, with plans to achieve up to 40,000 tonnes annually by 2028 at its first planned LFP battery manufacturing facility in Tuscon, Arizona.
ABF is a battery cell manufacturer developing the first-ever network of safe LFP cell giga-factories in the United States. The firm has plans to construct several other LFP battery manufacturing facilities across North America, each with a similar LFP CAM requirement.
The company intends to work closely with First Phosphate to update demand forecasts as plans for additional sites develop.
Both companies are set to begin a homologation process, where First Phosphate's raw materials will be integrated directly into LFP CAM produced for ABF. The CAM produced through this partnership will be used in ABF's battery cells and energy storage products.
First Phosphate and ABF plan to collaborate in developing an LFP battery ecosystem in North America. They are also considering the possibility of locating certain facilities at the Port of Saguenay, Quebec.
"Stationary energy storage and telecom applications are already an established market application for LFP batteries in North America alongside the rapidly expanding electric vehicle sector," First Phosphate CEO John Passalacqua said in a statement.
"Launching our LFP raw materials strategy with a focused partner like ABF with existing LFP product demand in North America allows us to enter the market in prudent and pragmatic fashion."
ABF president John Kem told investors that raw material bottlenecks, not technology, will be the “single largest impediments” rolling out fully localized LFP batteries in North America.
"We lean to a sustainable raw materials development partner like First Phosphate that is fully committed to the LFP battery industry as we focus to on-shore our full production of LFP batteries in North America."
--Updated with share price--