Lithium
Ontario’s Lithium miners power up for an electric future
Juniors have taken varying approaches to their business model. For example, Beyond Lithium, which has 61 properties spanning 180,000 hectares in Ontario, decided to adopt a project generator model, focused on lithium. Project generators maintain a portfolio of many projects and fund major exploration work by creating joint-venture partnerships with other companies. In addition to its project generator model, Beyond Lithium differentiated itself by focusing exclusively on Ontario. Allan Frame, Beyond Lithium’s president and CEO, shared the strategy behind this move: “When we decided to focus on lithium, we saw that things were more advanced in Québec. There is good infrastructure and well-known deposits, however, the cost per hectare is very high now. A lot of the geology is similar in the region.”
Some of Ontario’s critical minerals players are taking things a step further – opting to become as vertically integrated as possible to reduce logistical hurdles and extend their control further down the supply chain. We spoke with Green Technology Metals (GT1), an Australian company looking to become the first lithium producer in Ontario, with multiple mines, spodumene process plants, and a lithium conversion plant planned to be built in Ontario. Having already signed offtake agreements with battery manufacturers like LG Energy Solutions, GT1 is positioning itself to tap into the C$1.5 billion earmarked for critical minerals by the Canadian government’s Strategic Innovation Fund. “Having an entire vertically integrated supply chain in one region will decrease North America’s reliance on China for downstream processing and substantially decrease the carbon footprint, as materials will no longer need to be shipped across the world to make one EV. That does not exist anywhere else on the planet, but soon, it will in Ontario,” said Luke Cox, the CEO of GT1.
Only 10 miles away from GT1’s flagship Seymour Lake property, First Class Metals spent 2023 undertaking a successful 10-hole drill program at its ZigZag property. “While we have already received offers for this property, our philosophy prioritizes conducting an initial drill program to consolidate potential and increase the overall value. With an initial modest drill program now completed, striking a balance between advancement to add value and preserving potential is imperative,” said Marc Sale, CEO, First Class Metals.
Much like GT1, Rock Tech Lithium (Rock Tech) is also on its way to becoming an integrated lithium producer. Having already secured permits for a lithium hydroxide converter at the German-Polish border in partnership with Mercedez Benz, and is now initiating preparations and permitting for a similar converter in Ontario. Rock Tech is aiming to complete a FS for its Georgia Lake project in 2024, which it hopes to bring into production in 2026. Dirk Harbecke, CEO of Rock Tech, explained the strategy behind moving upstream with the Georgia Lake project: “Given the recent volatility and current dip in lithium prices, smaller Canadian projects may struggle to reach production. Achieving economies of scale becomes crucial to navigating these challenges successfully. Infrastructure, JVs, and regional supply chains play pivotal roles in achieving this scale.”
Headquartered in Toronto, Avalon Advanced Materials (Avalon) is also taking the vertical integration approach, with plans for a lithium processing plant in Thunder Bay. Avalon’s flagship JV property, Separation Rapids, 70 km north of Kenora, is undergoing a drill program to increase the resource from the current 10 million t. Although the government has poured billions into the downstream EV supply chain and attracted big names like LG, some feel that the same level of support should also be extended to the upstream. However, Zeeshan Syed, Avalon’s president, thinks the government is on the right track: “Focusing on downstream demand was the right initial step, followed by attention to midstream processing capacity, a capital-intensive aspect of the supply chain. Budget 2023 emphasized recycling and midstream processing, aligning with Avalon's thesis. By creating economic conditions for midstream capacity, we enable upstream players to regionalize the supply chain, reducing ESG footprint and catalyzing the entire region”.
Ontario’s Critical Mineral Strategy does seem to be working, as Ontario has attracted over C$25 billion in automotive investments for EV batteries and battery materials since 2020.
“To mitigate disruptions, OEMs are securing lithium supply through partnerships with miners, thus ensuring pricing stability. A nuanced, longer-term perspective is essential for lithium.”
Srini Godavarthy, CEO, Li-Metal
Canada’s historic push to build a homegrown EV supply chain is not merely borne out of environmental consciousness, but also to strengthen its geopolitical position on the world stage. “The Canadian government, like many other Western governments, is concerned with the disproportionate control of many critical minerals by Chinese state-owned or influenced companies,” said Ian Mitchell, partner, head of mining, Gowling WLG.
Li-Metal, whose carbonate-to-metal technology was chosen as one of TIME magazine’s ‘Best Innovations of 2023’, recognized Canada’s desire to reshore the lithium metal and anode production process, as currently over 90% of lithium metal is sourced from Russia and China. “Grants from the Canadian government have been vital to help scale our technology. As an intermediary, we fill a gap in the vertically integrated lithium supply chain. Currently, raw material is shipped to China and brought back as anodes. Once we scale production, an important part of the battery value chain will take place domestically,” said Srini Godavarthy, CEO, Li-Metal.
In addition to incentivizing lithium exploration via the Critical Mineral Exploration Tax Credit, Ontario’s government has also been financially supporting the R&D of lithium processing techniques. “Frontier Lithium has capitalized on government incentives, securing a C$2 million in grant funding from the Government of Ontario for lithium processing research. The company has also received support from the Critical Mineral Innovation Fund through Ontario’s Ministry of Mines to enhance support in battery mineral processing research,” said Trevor Walker, president and CEO, Frontier Lithium.
Ontario is already one of the largest automotive manufacturing jurisdictions in North America, serving as the Canadian headquarters for five global players: Stellantis, Ford, General Motors, Honda and Toyota. Together, these companies assemble millions of vehicles each year at their Canadian plants. If the province plays its cards right, it has the potential to build a world-class end-to-end EV supply chain.
Ontario’s Ring of Fire
Located 500 km northeast of Thunder Bay, the Ring of Fire has immense potential to produce the critical minerals needed to fuel the green energy transition, including platinum, copper, nickel, cobalt and chromite. The Ring of Fire is estimated to have the second-largest chromite deposit globally. In the last few years, juniors have been scrambling to stake claims and explore this remote part of Ontario. The Ring of Fire’s isolation and lack of infrastructure will pose significant hurdles to mine development. “The government is starting to install power lines and build roads to open things up in Northern Ontario, but this will take many years,” shared Greg Ferron, president and CEO, PTX Metals Inc., an exploration company active in the area.
On the heels of completing the acquisition of Ring of Fire Metals, Australian nickel producer Wyloo has been focused on advancing the Eagle’s Nest project. Much like the Canadian critical mineral prospectors, Australians are mindful of the West’s desire to be less reliant on China, leading them across the world to like-minded, democratic, tier-one jurisdictions such as Ontario. “We anticipate a continuous demand for nickel and, in particular, high-grade clean nickel,” said Kristan Straub, CEO, Canada, Wyloo.
“The lithium sector’s main growth driver would be the electrification of transportation which is a once-in-a-hundred-year change event.”
Ernie Ortiz, President and CEO, Lithium Royalty Corp.
With nine First Nations residing in the Ring of Fire, there are also social and environmental factors to consider as the area is developed. The Northern Road Link (NRL) project, an all-season road access to the Ring of Fire, will greatly boost the chances of success of projects there, while also benefiting the inhabitants. “Chief Bruce Achneepineskum of Marten Falls and Chief Cornelius Wabasse of Webequie First Nation are extraordinary leaders in their communities who are working on the environmental assessments for roads in the region,” shared George Pirie, Ontario's Minister of mines.
The debate on whether or not to develop the Ring of Fire is still ranging, with some critics and First Nations arguing that the NRL project, and the anticipated uptick in mining activity that will follow, may release billions of tons of carbon dioxide equivalent of GHGs as the peatlands in the area are disrupted. For others, like the Marten Falls First Nation, the NRL project is seen as a lifeline: “The road is the first step. Even communities with access to roads are still in poverty. We are looking at the grander picture for our youth, to put them in a better starting position. The road will help attract qualified teachers to our community,” said Bruce Achneepineskum, Chief, Marten Falls First Nation.
As the climate crisis worsens, the clock is ticking for the Ring of Fire’s residents and prospectors who are keenly awaiting the NRL. “The changing weather patterns, attributed to climate change, affect the viability of the winter road and limit its lifespan to six weeks, at most. We must bring in all our lumber and fuel during that period. The Community Access Road’s connection to the provincial road network will significantly decrease the cost of transportation of goods and freight,” continued Chief Achneepineskum.
Global demand for critical minerals will more than double by 2030, according to the International Energy Agency. Canada is not free from this demand chokehold, mandating that 60% of all passenger vehicle sales will be electric by 2030. In Ontario, the government is subsidizing US$21 billion to Volkswagen and Stellantis-LG Electric Solutions to incentivize the establishment of electric vehicle (EV) plants in St. Thomas and Windsor, respectively. With the commencement of LG's plant operations in 2024, critical mineral output in the province must be maximized to reap the benefits of a vertically integrated supply chain.
“I think the biggest thing the Canadian government did was the Critical Mineral Exploration Tax Credit, which is a very attractive incentive.”
Allan Frame, President and CEO, Beyond Lithium
Article header image by simonkr at iStock, courtesy of Lithium Royalty Corp.