"We saw this lack of knowledge around battery materials as an opportunity to lead the market in trying to understand what the materials of the future would be."
Pallinghurst originated as a long-term iron ore and manganese investor before becoming the world’s largest producer of colored gem stones. The company has now shifted its focus to PGM’s and battery materials. What provoked this strategic pivot?
We decided five years ago that a vast decarbonization was on the horizon, so we wanted to reposition Pallinghurst as a producer of materials related to renewable energy and energy storage. I took my team of 30 people away from doing deals, and we went back to school, because it was very clear to us that the previous "experts" from the financial world had very little clue about lithium or graphite. They did not know their spodumene from their brine or their hydroxides from their carbonate. Likewise, for graphite there was little understanding of the differences between flake and purified, shaped and coated graphite. We saw this lack of knowledge around battery materials as an opportunity to lead the market in trying to understand what the materials of the future would be.
How did you come to a decision on which materials to invest in, and what made Québec a logical place to bet big?
We quickly identified that we wanted to be in lithium, graphite, and polymetallics, which consists of nickel base, copper and cobalt. Another break from the past for Pallinghurst was that we made the decision to no longer operate in Africa, and we also wanted to avoid entering into South America. The reason for this is that if a consumer is buying an electric car, the concept that Congolese children are mining the stuff inside their EV battery does not flow. The narrative also fails if you are taking brine up and playing with the water table in parts of South America, where consequently, farmers are not having water for their livestock and crops. Finally, there is the general rule of law aspect.
This led us to a decision to be present solely in investment grade countries, and clearly Canada, and Québec in particular, are the big winner. Australia is very attractive for a lot of reasons, but it is sitting on the other end of the world. Canada is just north of the US border, so we can produce our graphite or lithium and we can pop it on the train and it will be down in Buffalo in a few hours. We are right at the doorstep to what will become the world’s most important electrical vehicle market. We see huge upside to being in Québec and we have already made a billion dollar commitment to our projects in the province.
What can we expect to see from Nemaska over the coming year or two?
We had a nice partnership with Investissement Québec at Nouveau Monde graphite, and we did a similar deal in the case of Nemaska. It was a Pallinghurst-IQ 50-50 deal where Pallinghurst is managing the asset.
Since cutting the keys in December 2020, we are now eight months in and optimizing the mining schedule and feeding into the plant. For the next three decades plus, the Whabouchi mine will be feeding our plant in Bécancour, where we will be producing lithium hydroxide. The next two or three years will be all about building.
Can you provide an update on the progress at Nouveau Monde and its efforts to supply North America with high-purity anode material?
We are now finishing the first line of production, which is small at only 2,000 t/y, but that is enough material for the automakers to test our final product. We will have a real commercial line that will take materials from our mine in Québec, and then it will shape, purify and coat the anode material. When the market becomes more educated about this, they will become excited and that is why we moved Nouveau Monde onto the New York Stock Exchange. We are the first graphite company listed on the NYSE. The line we are opening is the first coded, purified, shaped materials plant outside of China ever. Come hell or high water, in the anode, there will be graphite, and Nouveau Monde is going to mine that graphite responsibly with an electrical fleet fed by Québec hydropower.