Talga Group (ASX:TLG) has entered into a non-binding letter of intent (LOI) with Japanese firm Mitsubishi Chemical Corporation to advance technical evaluations and commercial discussions on the potential supply of Talnode graphite anode materials for hybrid electric vehicle (HEV) batteries, according to a Monday Australian bourse filing.

The companies intend to negotiate a conditional supply terms sheet by September and finalize a definitive three-year supply agreement by December, contingent upon successful testing, product qualification, and other specified conditions, per the filing.

The company said the non-binding LOI has no immediate financial impact but represents a key opportunity to expand into Japan's HEV battery supply chain, the filing added.