NextSource Materials Inc. (TSX:NEXT, OTCQB:NSRCF) said on Thursday it has signed a non-binding letter of intent with a major Japanese anode material producer to negotiate long-term supply agreements for electric vehicle battery materials.
The Canadian company said the proposed agreements would cover the supply of anode active materials starting in 2027 from its planned Battery Anode Facility in Abu Dhabi, UAE.
The Japanese producer requested anonymity due to confidentiality requirements, NextSource said.
The letter of intent follows an extended technical evaluation and qualification process in which the Japanese producer assessed NextSource’s anode products for use in its global battery materials supply chain. The producer supplies multiple automakers and battery cell manufacturers, according to the company.
The LOI outlines a framework to negotiate two concurrent, multi-year supply agreements covering multiple grades of anode active material to be produced at the Abu Dhabi facility.
If finalized, the agreements would build on NextSource’s previously announced binding, multi-year offtake agreement with Mitsubishi Chemical Corp to supply about 9,000 tonnes per year of anode material to a major original equipment manufacturer’s North American electric vehicle operations.
Together, the potential agreements would fully utilize and exceed the expected 14,000 tonnes per year production capacity of Phase 1 of the Abu Dhabi facility, the company said.
Pricing under the proposed agreements would be based on a market-linked mechanism, with final specifications and commercial terms to be determined in definitive contracts.
NextSource CEO Hanré Rossouw said the LOI “represents another important step in building a portfolio of long-term commercial relationships with globally recognized battery materials players.”
“Following the successful validation of our anode products, this offtake partnership further de-risks our UAE Battery Anode Facility and demonstrates the clear market demand for our sustainably produced, vertically integrated graphite products,” Rossouw added.
The LOI is non-binding and remains subject to final technical qualification and the execution of definitive agreements, NextSource said.