Canada-listed NextSource Materials has unveiled plans to build a $291-million battery anode facility (BAF) in Abu Dhabi, positioning itself as the largest anode producer outside Asia and a key supplier to Mitsubishi Chemical under a binding offtake deal.

The company on Wednesday released results of a technical and economic study confirming the UAE facility will have capacity to produce 30 000 t/y of anode active material (AAM). The study forecasts post-tax net present value of $442-million, an internal rate of return of 24% and yearly evenues of $195-million once the project reaches full production.

Phase 1 of the development will cost $150-million and deliver 14 000 t/y of AAM – exceeding Mitsubishi’s initial requirement of 9 000 t. Initial production is planned for late 2026, with full capacity targeted for early 2028.

President and CEO Hanré Rossouw said securing the site and existing building in Abu Dhabi’s Industrial City was a major step in accelerating NextSource’s downstream strategy.

“Securing our facility in the UAE is a pivotal step in expediting NextSource's downstream strategy under our offtake agreement with Mitsubishi Chemical Group, and the site's readiness allows for rapid project execution,” he said.

“The results of our BAF study confirm our unique position to deliver high-performance graphite anode material at scale, with compelling economics and a clear path to scalable commercial production. This milestone validates our global expansion strategy and reinforces our commitment to supporting the electric vehicle (EV) supply chain with vertically integrated, ESG-compliant solutions.”

The facility will be installed in a high-quality industrial building requiring minimal modification. Located in an expedited permit zone, construction will not require an environmental-impact study, accelerating the installation of equipment and delivery of the first product to Mitsubishi in 2026.

The Abu Dhabi site also offers room to expand production to serve additional customers, with NextSource noting advanced negotiations are under way with other original-equipment manufacturers. The company has launched a strategic partner process and is in discussions with debt and equity investors globally to fund construction.

NextSource signed the Mitsubishi offtake agreement in August, becoming the Japanese group’s sole supplier of AAM for the North American EV market. The UAE BAF is designed to meet that agreement and provide additional capacity for further offtakes.

About 95% of a lithium-ion battery’s anode is graphite, and around 35% of the total battery weight comes from the anode. Benchmark Mineral Intelligence has flagged graphite as the most critical of all battery materials, with concerns mounting about supply chain concentration in China.

NextSource said its Abu Dhabi project would provide a secure and traceable source of supply that is fully compliant with US government requirements for alternative sourcing.

The company’s study, prepared with global engineering firm Stantec, estimated a 33-year life of operation for the UAE plant, with payback in less than five years. Average sales price assumptions were $6 417/t, in line with contract pricing and BMI forecasts.

The next steps include completing legal documentation for the land and building acquisition, finalising front-end engineering design, and securing funding. Once capital is in place, procurement and installation will begin, with commissioning targeted for the fourth quarter of 2026.

NextSource, which owns the Molo mine in Madagascar, previously planned to build a BAF in Mauritius, but earlier this year tilted its focus to the Middle East.