To begin with and as I have stated on dozens of posts, there are NO OFFTAKES in natural flake graphite as ALL graphite product has to go through several steps of processing and qualification before any customer will agree to any level of a supply agreement, and then is limited in scope for the first year with small progressions over subsequent years depending if a new supplier can perform in production, performance, logistics, and price.
The term "offtake" was introduced into the graphite industry by the various industrial mineral types, iron ore to name one, where offtakes are applicable as a customer purchases the unprocessed resource; then the customer will process the ore or natural resource into a usable product.
I have written many sales agreements with many customers over many years, there are instances where a company can claim securing a supply agreement, yet there are performance clauses in the agreement such as the agreement will be null and void if commercial production is not realised with in a specific time frame, if commercial production does not meet the same performance standards achieved with either lab or pilot plant samples, and depending on the application or customer, unable to secure ISO 9001 certification. Being ISO compliant means nothing in the majority of applications and markets.
Lab and pilot plant samples are indicators and no customer will risk millions on a take or pay supply agreement base on lab samples or pilot plant samples. Even refractories require a commercial production sample of ~20 MT for final verification of lab or pilot samples. If the commercial production fails perform, no sales.
I have read the various claims by most of the new starts on securing agreements, but in the graphite industry, take or pay contracts apply to very specific technical or limited graphite grades that meet a customers aggressive and narrow specifications. The graphite products that can be produced by very few suppliers, where supply is critical to a customer and securing a reliable supply that has undergone extensive, lengthily and costly qualifications.
Today, natural flake graphite is available from many suppliers, hence a customer can source the product needed from the lowest price supplier supplying a like grade or mesh.
I would suggest that when a new graphite start up makes such a claim, to disclose the specific clauses that will negate the contract. Commercial production achievement and commercial production product verification would be the two that would disqualifier metrics of a supply agreement if not met per the terms of the agreement. There are no fixed prices in natural flake graphite for an extended period of time, so pricing clause would also be prudent that specific thresholds exceeded either low or high would also make a contract null and void.
Any of the examples given above would not qualify with any lending institution as bankable with the large number of potential variances and target milestones that can sideline any debt facility.
No matter what claims are made by any new start, it takes 3 years or more to qualify a new batter grade product in any new battery application. To confirm this as an example, as any Apple battery tech now long it takes to qualify a new battery material for an iPone or iPad? Facts are difficult to dispute.
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