MELBOURNE (Reuters) - Australia-listed battery material developer Novonix Ltd <NVX.AX> struck a deal to supply South Korea's Samsung SDI Co <006400.KS> with synthetic graphite anode material for lithium-ion batteries, lifting Novonix's shares up as much as 38% on Monday.
Novonix, which is building a manufacturing plant in Tennessee, will supply at least 500 tonnes of the battery material for electric vehicle batteries in the first phase from October 2020, it said in a statement to the Australian Securities Exchange.
Synthetic graphite is increasingly favoured by battery makers because its molecules are more uniform than mined graphite. However, higher costs have traditionally made it less competitive.
“The deal is part of our efforts to secure stable supplies of raw materials,” a spokesman of Samsung SDI, a unit of technology giant Samsung Electronics <005930.KS>, said in Seoul, without elaborating on why it chose Novonix. Both firms declined to give the value of the deal.
Novonix Managing Director Philip St Baker told Reuters that the company's manufacturing technique at its Tennessee operations had lower costs when compared with rivals, but declined to offer details.
The company sources its raw material as a byproduct from the petrochemical industry. It has been speaking with a number of automakers and expects to sign more deals in future as it looks to scale up its business, St Baker said, adding it is also scouting for strategic investors.
Depending on demand growth, it expects to invest "several hundred million" in Tennessee over the next few years, St Baker said.
Last year, artificial graphite accounted for slightly more than half of market demand, according to consultancy Avicenne Energy. Artificial graphite in battery anodes is expected to nearly double by 2025, to 320,000 tonnes from 165,000 tonnes in 2020, it said in a report.
That outpaces growth in natural graphite demand which is seen at 225,000 tonnes by 2025, compared to 125,000 tonnes next year, it said. China's ShanShan [SSHOLG.UL] and Sinuo hold around a fifth of the market for artificial graphite each, according to the report.
St Baker said Novonix would bank on its board members to help raise its profile and prepare it for growth, even though its product was yet to reach broad commercial use.
They include Andrew Liveris, as a non-executive director. Liveris is a former chief executive of Dow Chemicals and a board member now of Saudi Aramco.
Novonix shares, which posted their biggest ever intraday gain on Monday, ended up 8.6%. Samsung SDI shares were down 1.1% in afternoon trading.
(Reporting by Melanie Burton in Melbourne; Additional reporting by Hyunjoo Jin in Seoul; Editing by Muralikumar Anantharaman)
