February 2023
Lithium miners are rushing to Canada to take advantage of the mining-friendly jurisdiction. Under its Critical Minerals Strategy, Canada will fast-track the development of critical minerals production, which includes lithium and other battery metals. Canada’s lithium supply is expected to reach 54kt LCE in 2023.

Canada will support critical projects with up to C$3.8bn (US$2.9bn) in funding over eight years from 2022. The strategy will focus on mineral processing, manufacturing, and recycling for key mineral and metal products in the battery and rare earth elements supply chain.

The province of Quebec is poised to become an ideal location for lithium mining and lithium hydroxide production due to abundant mineral resources, low-cost hydroelectricity, and supportive provincial government. In July 2022, Rio Tinto started production of spodumene concentrate at its demonstration plant in Quebec. The demo plant will showcase a new environmentally friendly spodumene concentration process at the industrial scale.


Government Intervention

The Canadian government ordered Chinese companies to divest their holdings in three Canada-based mining companies exploring and developing lithium deposits. The announcement comes after Canada launched a strict policy on investment in the mineral sector by state-owned companies. Chinese companies have over the past years invested heavily in lithium, cobalt, and rare earth metals to secure their supply chain for the energy transition industry.

The three Canadian lithium companies are Power Metals Corp, Ultra Lithium, and Lithium Chile. Power Metals is developing a lithium deposit in Ontario. China-based rare earth producer Sinomine invested C$1.5m (US$1.1m) in Power Metals for 5.7% stake in the company at the start of 2022.

Ultra Lithium is developing the Laguna Verde lithium brine project in Argentina. China-based Zangge Mining, which has a 14.2% stake in Ultra Lithium, said it would finance the development of the Laguna Verde project.

Lithium Chile is developing the Salar de Coipasa brine project in Chile. China-based Chengxin Lithium invested C$28m in May to take a 19.4% stake in the company.

All three Canadian companies will now have to find other partners to finance their projects. Under the Investment Canada Act, the government will “act decisively when investments threaten the national security and critical minerals supply chains, both at home and abroad”.

Australia has similarly blocked Chinese investment in the past. In 2022, the Australian government blocked Chinese state-owned Baogang Group from taking a 13% share in Northern Minerals, which is developing a rare earth deposit in Western Australia. Yibin Tianyi Lithium Industry was also blocked from investing in Australia-based AVZ Minerals, which is developing lithium projects in the DRC.


Mine Restarts

Emerging lithium producer Sayona Mining is forging ahead with plans to restart its North American Lithium (NAL) operation in Quebec. Sayona was awarded the final permit for the restart of the project. Sayona Quebec, a strategic partnership between Sayona Mining (75%) and Piedmont Lithium (25%), has launched a pre-feasibility study (PFS) to assess lithium carbonate production at the NAL project.

Sayona hopes that the PFS will fast-track its plans to evaluate downstream options. Spodumene concentrate production is expected to start in early 2023 at the NAL project. The PFS will assess processing of spodumene into lithium carbonate. The potential downstream operation will increase the long-term value and profitability of the NAL project.

Sayona has now received over 130 permits from provincial and federal authorities of Canada and Quebec to ensure it can restart the NAP project with all the required environmental regulations and obligations. NAL is on track for first spodumene production by the end of the March quarter.

The existing plant at NAL has a nameplate production capacity of 220ktpa of spodumene concentrate (30ktpa LCE). NAL has a binding offtake agreement with Piedmont for up to 60ktpa of spodumene concentrate or 50% of Sayona Quebec’s production.


Offtake Deals

German carmaker Mercedes-Benz and Canada-based Rock Tech Lithium have signed a definitive supply agreement for 10ktpa of battery-grade lithium hydroxide over a five-year period from 2026.

The offtake agreement represents over 40% of Rock Tech’s expected annual production from its planned converter facility in Germany. Through the deal, Mercedes-Benz secures enough European-sourced lithium hydroxide to supply 150,000 EV batteries.

Rock Tech said the offtake sales volume will equal about C$2bn (US$1.45bn) over the five-year term. The company reported that the European Investment Bank is currently reviewing a potential EUR150m (US$146m) investment for the German converter project.

Rock Tech Lithium completed a PFS for its Georgia Lake Project located in Ontario, Canada. The PFS supports the construction of an open pit and underground project to mine spodumene. A 1Mtpa spodumene concentrator has also been evaluated to concentrate the spodumene mined over a 9-year period. A 15ktpa lithium hydroxide refinery is also being considered but was not included in the PFS.

For the initial four years, spodumene will be mined from a low-cost open-pit operation. An underground mining operation will be used for the next 5 additional years. The average spodumene concentrate production is expected to be 100ktpa (15ktpa LCE).



Exploration Continues

Patriot Battery Metals started its winter 2023 drill campaign in January. The company targets a minimum of 20,000m using up to five drill rigs at its Corvette property in the James Bay region of Quebec.

Patriot aims to extend the 2,200m strike length of the CV5 pegmatite system and continue delineation of the CV13 discovery. The CV lithium trend is an emerging spodumene pegmatite district discovered by Patriot in 2017. The company reported its highest-grade lithium drill intercept in January. The drill hole at the CV5 pegmatite returned 156.9m at 2.12% Li2O, including 25m at 5.05% Li2O.

Exploration company Cygnus Gold has launched its maiden resource drilling program in James Bay, Canada. The 10,000m diamond drill program will focus on resource definition at multiple outcropping spodumene zones.

The drilling program will target shallow spodumene-bearing pegmatites in the top 150m over an initial 1,000m strike. Historic reconnaissance drilling previously outlined spodumene with grades of up to 2.6% Li2O over a 620m strike.

The drilling program starts just three months after the company acquired the project. The Pontax Lithium project is located in one of Canada’s most prolific lithium areas according to the company.

Cygnus Gold’s Pontax lithium project is less than 50km away from Allkem’s James Bay project which has a mineral resource estimate of 40Mt @ 1.4% Li2O.


Funding Support

Alberta-based E3 Lithium has received a US$20m investment from the Canadian Government through the Innovation, Science and Economic Development’s Strategic Innovation Fund.

The fund’s objective is to advance innovation “for a better Canada by providing funding for large projects and national innovation ecosystems”. Other companies receiving this funding include Rio Tinto, Stellantis, and General Motors.

E3 Lithium will use the funding to support its projects including its proprietary ion-exchange technology for lithium extraction and downstream lithium hydroxide conversion. The works will support a definitive feasibility study for the project.