Key Highlights

•  Talga will reserve up to 2,000 tonnes per annum of Talnode-C, produced in Sweden, for Dainen or its customers.

•  The supply term is five years from an expected start of deliveries in late 2027, with rights to extend.

•  The parties will work towards a definitive master supply agreement by March 2027, and deliveries depend on progress with Talga's Swedish production plans.

Talga Group (ASX:TLG) has signed a binding offtake term sheet with Japan's Dainen Materials covering its Talnode-C natural graphite anode material. The agreement was reported on 28 October 2026 and builds on a letter of intent the two companies signed in July 2026.

Under the term sheet, Talga will reserve up to 2,000 tonnes per annum of Talnode-C, produced in Sweden, for Dainen or its customers. The supply term is five years from an expected start of deliveries in late 2027, with rights to extend.

Key terms

Pricing is based on a negotiated price floor plus a mutually agreed premium recognising the product's environmental, social and governance credentials and its supply from outside any foreign entity of concern. Prices will be set in US dollars on an ex-works basis, meaning the buyer takes responsibility for transport from Talga's facility.

The binding elements of the term sheet cover the capacity reservation, the commercial framework and obligations to negotiate. Final purchase volumes, however, are not binding until a definitive master supply agreement is signed. The parties have agreed to use commercially reasonable efforts to execute that agreement by March 2027.

Since the July letter of intent, Talnode-C has been tested against customer specifications, a process that typically precedes commercial supply arrangements in the battery industry.

What the parties said

Talga chief executive Martin Phillips said the term sheet "reflects the successful maturation of Talnode-C through years of intensive testing". He added that it confirms the company's ability to deliver traceable anode material from a Western supply chain.

Dainen Materials executive vice president Daisuke Hayabara said the company was pleased to have signed with Talga as a new graphite anode supplier and looked forward to concluding the definitive agreement.

Why it matters

Graphite is the dominant anode material in lithium-ion batteries, and global processing capacity for battery-grade anode material is heavily concentrated in China. Battery makers and governments in Japan, Europe and North America have been seeking alternative sources, particularly where supply chains can be traced and meet sourcing rules linked to foreign entity of concern restrictions.

For Talga, a binding framework with a Japanese counterparty provides commercial validation for its product and a potential customer as it moves towards production. The pricing structure, combining a floor price with a premium for provenance and ESG credentials, also reflects an attempt to differentiate Western-produced anode material from lower-cost supply.

The 2,000 tonnes per annum covered by the term sheet is a defined volume that can be weighed against the company's planned production capacity as further offtake agreements are secured.

Limitations and risks

The term sheet is not yet a full, legally complete supply contract. Volumes remain unconfirmed until the master supply agreement is signed, and the March 2027 deadline is subject only to a commercially reasonable efforts obligation, so there is no certainty that a final agreement will be concluded on that timetable or at all.

The price floor and premium have not been disclosed, which makes it difficult to assess the financial value of the arrangement. Deliveries are only expected to start in late 2027, and that timing depends on Talga's production readiness in Sweden. Customer qualification of Talnode-C may also still be ongoing, and anode materials typically require extended qualification before large-scale use in batteries.

Graphite and anode prices have been weak and volatile, which may affect negotiations and the attractiveness of premium-priced supply.

Next steps

The two parties will now work jointly towards a definitive master supply agreement by March 2027. Talga's ability to begin deliveries in late 2027 will depend on progress with its Swedish production plans, which the announcement did not detail. Any further offtake arrangements with other customers would be reported separately.