NextSource inks multi-year graphite supply deal with Mitsubishi Chemical for EV batteries

NextSource Materials has secured a binding multi-year offtake agreement with Mitsubishi Chemical Corporation to supply approximately 9,000 tonnes per annum of intermediate graphite-based anode material for EV batteries destined for a major North American OEM. This strategic deal positions NextSource as a key vertically integrated graphite supplier outside of China, crucial for diversifying global battery material supply chains amidst rising US tariffs on Chinese graphite. To fulfill the agreement, NextSource plans to develop a large-scale Battery Anode Facility in the UAE and expand its Molo mine in Madagascar, with full ramp-up of supply expected by 2027.

Analysis

NextSource Materials has secured a pivotal, binding multi-year offtake agreement with Mitsubishi Chemical Corporation, a development that significantly de-risks its growth trajectory. The deal commits NextSource to supply approximately 9,000 tonnes per annum of intermediate anode active material (AAM) for a major North American automotive OEM's electric vehicle battery production. This strategically positions the company as one of the few vertically integrated, ex-China graphite suppliers, a critical advantage given the recent imposition of a 160% US tariff on Chinese graphite imports. To meet this demand, NextSource is advancing plans for a large-scale Battery Anode Facility (BAF) in the UAE and a Phase 2 expansion of its Molo mine in Madagascar. While the company has already purchased about half of the required BAF equipment and targets a full production ramp-up by 2027, final investment decisions remain contingent on the completion of technical and economic studies, introducing a key execution variable.

Key Decisions for Investors

• This binding offtake agreement serves as a significant de-risking event that validates NextSource's strategy to become a key non-Chinese graphite supplier for the North American EV market.
• Investors should closely monitor key execution milestones, particularly the final investment decisions and financing for the planned UAE Battery Anode Facility and the Molo mine expansion.
• Factor in the long-term timeline, as the full financial impact is not expected until the 2027 production ramp-up, making project execution and capital management the key variables to watch in the interim.