Novonix shares jump on battery deal with South Korea’s LG

Brisbane-based renewable energy firm Novonix has sealed a $44.9m deal with one of the biggest manufacturers of electric car batteries in the world.

Shares in Brisbane-based renewable energy firm Novonix soared after it sealed a $44.9m deal with one of the world’s biggest manufacturers of electric car batteries.

Nasdaq and ASX-listed Novonix, which counts Queensland billionaire Trevor St Baker as one of its major investors, said the agreement with South Korea’s LG Energy Solution would allow the firms to research and develop battery materials for electric vehicles and storage systems.

LG Energy Solution and Hyundai Motor Group last year announced they would build a US$4.3bn plant to make batteries for electric vehicles in Savannah, Georgia. Novonix shares surged 19.1 per cent to close at $1.16 on the ASX on Wednesday.

LG now has eight battery plants currently operating or being constructed in the US, where it is concentrating the majority of its production efforts.

Hyundai will assemble battery packs using cells from the Georgia plant, then supply them to for Hyundai, Kia and Genesis EV models.

Novonix chief executive Chris Burns said the landmark deal with LG Energy Solution would help cement the Brisbane company’s ambition to become a leading supplier of artificial graphite anode material for batteries.

Novonix chief executive Chris Burns. Picture: Jane Dempster

While natural graphite anode has the advantages of lower cost and lower energy consumption synthetic anode performs better in terms of faster-charge turnaround and battery longevity. Synthetic graphite can be significantly more expensive to produce than natural graphite.

Under the agreement, Novonix will issue $US30m of unsecured convertible notes to LG Energy as part of the tie up that also includes an option to provide up to 50,000 tonnes of anode material over a 10-year period from the start of mass production.

The deal comes as President Joe Biden moves to strengthen the North American battery supply chain amid surging demand for batteries for electric cars and homes.

Novonix last year confirmed it had been selected to enter negotiations to receive a $US150 million grant from the Department of Energy (DOE) to expand its domestic production of high-performance, synthetic graphite anode materials.

Hyundai Ioniq is considered one of the best mainstream electric vehicles currently available.

Mr Burns said the agreement with LG would include development of anode material specifically required by the South Korean company and its partners.

“It demonstrates our leading position to establish a supply chain for high performance artificial graphite for the battery industry in North America,” said Mr Burns. “We are excited to formalise our work wit LG Energy Solution.” Novonix is expanding production at its Riverside facility in Chattanooga to meeting growing demand.

LG Energy Solution senior vice president Dongsoo Kim said the partnership with Novonix demonstrated its determination to establish a solid battery supply chain in the US. “It will complement our local manufacturing network to meet our customers’ needs,” Mr Kim said.

More than 10 million electric cars were sold worldwide last year, mostly in the US, China and Europe, with sales expected to grow by another 35 per cent this year to reach 14 million.

Mr St Baker, whose holding company has about 4.16 per cent of Novonix, also has major investments in electric vehicle recharging company Tritium and electric vehicle fast charging network Evie. Shares in dual-listed company Novonix are down 18 per cent on the ASX and 32 per cent on Nasdaq so far this year amid investor disappointment with its earnings.

Novonix's Chattanooga plant in the US is ramping up production

Originally published as Novonix shares jump on battery deal with South Korea’s LG