By M. Marin
NASDAQ:NVX
READ THE FULL NVX RESEARCH REPORT
CUSTOMERS ARE SAMPLING NOVONIX MATERIALS
Divestiture of noncore businesses underscores prioritizing & enables focus on synthetic graphite
Novonix (NASDAQ:NVX) is building a North American vertically integrated synthetic graphite supply chain in North America. This week, the company announced that it has entered into a binding term sheet for the proposed sale of its NOVONIX Battery Technology Solutions (BTS) unit in Canada, with former CEO Dr. Chris Burns. Separately, the company believes this strengthens its competitive position for the North American market.
BTS is not a core business for the company, which is focusing on the development of its synthetic graphite business. BTS provides advanced battery testing systems. The planned divestiture is also consistent with the recent sale of another noncore business, the Mt. Dromedary natural graphite mining project. We view these initiatives positively as they underscore, in our view, NVX’s prioritizing its synthetic graphite development and the sale of noncore assets, which will enable the company to focus on and allocate capital to synthetic graphite.
We also believe the importance of creating a local source of such materials and reducing reliance on other countries is highlighted by recent regulatory measures. Earlier this month, the U.S. Department of Commerce issued its final determination regarding antidumping and countervailing duty investigations covering anode active materials (AAM) imported into the U.S. from China. Subject to a final determination by the U.S. International Trade Commission, expected in March 2026, that the U.S. AAM industry has been materially impeded because of Chinese AAM imports, the total amount of the tariffs applicable to AAM imported from China will be at least 160%.
If the ITC affirms, then an antidumping duty of 93.5% will be imposed on AAM imports from China from specified companies and a duty of 102.72% will be imposed China-wide on all other exporters. A countervailing duty of 66.82% to 66.86% will be imposed on all AAM imports from China producers. The duties apply to anode-graphite materials, including synthetic and natural graphite products and blended materials used in lithium-ion battery applications.
Synthetic graphite is a designated U.S. Critical Mineral, and NVX’s patented production technologies have been shown to be more energy-efficient and environmentally responsible compared to Chinese product, which represents the majority of production currently. Currently, manufacturers in China produce about 65% to 80% of the world's graphite, according to the U.S. Geological Survey and United States Trade Representative (USTR). China accounts for roughly 79% of global production of synthetic anode material and an estimated 80+% of the market for automotive battery anodes, implying potential risks, we believe, that could lead to supply side disruptions.
The Department of Commerce determination follows the December 2024 petition for tariffs by the American Active Anode Material Producers (AAAMP), which includes NVX, alleging that Chinese manufacturers were receiving government subsidies enabling them to sell at reduced prices in order to retain their dominant industry position. On January 8, 2025, the U.S. Department of Commerce initiated antidumping duty (AD) and countervailing duty (CVD) investigations of active anode material from China.
Companyprogressing toward commercial-scale production at Riverside facility
NVX continues to progress toward commercial-scale production at its Riverside facility in Chattanooga, Tennessee. The facility is on track to become the first large-scale synthetic graphite manufacturing plant in North America, according to NVX. In late 2025, NVX delivered its first mass production, commercial-grade sample of synthetic graphite for industrial applications to one of North America's largest value-added carbon processors with a global market reach. NVX provided an industrial-grade mass production sample for final qualification for use in various industrial applications. Industrial-grade product qualification enables a quicker roadmap to market than battery-grade synthetic graphite, according to the company. If/ when the two form a definitive supply agreement after final product qualification has been completed, target supply volumes will be further defined.
The company believes this delivery represents a milestone and demonstrates that its proprietary continuous graphitization furnace technology can be used to produce industrial-grade products at a mass production scale. Moreover, the capability to provide materials to markets outside the battery space is expected to enable NVX to diversify its product portfolio and allocate Riverside production.
SUBSCRIBE TO ZACKS SMALL CAP RESEARCH to receive our articles and reports emailed directly to you each morning. Please visit our website for additional information on Zacks SCR.
DISCLOSURE: Zacks SCR has received compensation from the issuer directly, from an investment manager, or from an investor relations consulting firm, engaged by the issuer, for providing research coverage for a period of no less than one year. Research articles, as seen here, are part of the service Zacks SCR provides and Zacks SCR receives payments totaling a maximum fee of up to $50,000 annually for these services provided to or regarding the issuer. Full Disclaimer HERE.