Battery metals
Québec seizes on global demand for battery metals
Against the backdrop of a world mired in uncertainty and distrust, one element of solidarity shines through: politicians across party lines, multinational corporations, environmental activists, and local stakeholders share a common vision of a ‘green revolution.’ In this fast-tracked fantasy, windmills tower over battery-powered vehicles zooming past fields of solar panels as an electric plane flies overhead (the first of its kind recently completed a point-to-point flight from the Canadian mainland to Vancouver in August 2022). The ones who will come out winners are those who realize it all begins underground.
Canada’s federal government has proven itself to be ahead of the curve over the past few years when it comes to supporting the production of battery metals. In April 2022, senior government sources announced the country’s national budget will include an investment of at least C$2 billion as part of its strategy to boost the production and processing of critical minerals going into the battery supply chain. In a national poll, the Mining Association of Canada (MAC) discovered that this scale of public sector commitment does more than just promote advancements directly within the mining industry; funding into battery metals projects is providing the sector with a much-needed public relations boost as mining is becoming associated with the worldwide energy transition. MAC announced levels of support for Canadian mining were at an all-time high due to a heightened understanding of the industry’s crucial role in the production of materials essential for a low carbon future, with two thirds of respondents approving of government incentives to encourage more investment in mining in Canada and 80% acknowledging they have positive feelings towards current producers of minerals and metals in the country.
Right in step is the provincial government of Québec, which had outlined its ‘Québec Plan for the Development of Critical and Strategic Minerals’ in 2020 as a five-year initiative to advance geoscientific knowledge, provide financial support for exploration and R&D, and support development projects within the province that focus on battery metals like cobalt, nickel, graphite and lithium. The C$90 million plan has already made strides in helping Québec to take advantage of its mineral endowment on an international level, and in gaining the attention of the goliaths of the global energy transition, including General Motors, who announced in March 2022 a plan to spend C$500 million on the construction of a new battery cathode materials plant at Bécancour as part of a joint venture with South Korean chemical producer, POSCO Chemical. Importantly, the impacts of the plan are also being felt closer to home, helping to spur sustainable economic development in the province and enabling it to take steps towards self-sufficiency in its battery supply chains and recycling capabilities.
The proactivity of the federal and provincial governments to accelerate the production and processing of critical minerals is grounded in a sense of urgency associated most prominently with the electric vehicle (EV) revolution. In late August 2022, German carmakers Volkswagen and Mercedes-Benz struck cooperation agreements with Canada to secure access to battery materials including nickel, cobalt and lithium to help hit production targets, avoid certain tax and tariff-related issues, and shorten their supply chains heading towards car factories in the US. Volkswagen is targeting construction of six large battery cell factories in Europe by 2030, but it also hopes to announce the plant location of an upcoming North American factory by the end of 2022, in addition to potential mining and refining partners on the continent. For its part, Mercedes-Benz plans to go fully electric by the end of the decade wherever market conditions allow.
The assembly lines of auto manufacturers around the world are evidence that the EV revolution is already well underway. The International Energy Agency (IEA) announced that sales of electric vehicles doubled in 2021 from the previous year to a record total of 6.6 million. While only 120,000 electric cars were sold worldwide in 2012, a mere decade later, this number is hit on a weekly basis. These figures will only rise in response to the Biden administration’s passing of the Inflation Reduction Act in August 2022, which introduces several changes to the tax credit regime for new EV purchases in the US, allowing consumers to receive as much as US$7,500 in tax credits for qualifying vehicles with final assembly in North America.
The rapid uptick in EV sales during the pandemic put pressure on battery supply chains, and Russia’s war in Ukraine turned that pressure up a notch. According to the IEA, lithium prices were over seven times higher in May 2022 than at the start of 2021. “Any way you slice it, there is demand that cannot be met by the currently outlined resources, including in North America,” explained Nicole Brewster, president and CEO of Renforth Resources, a junior company focused on exploration for battery metals at its Surimeau district property in Québec. “These metals are heavy and expensive to move, so you want to have the supply close to where you are using the metal to build batteries. Given the intent to build batteries in Canada and the US, we will need more metals.”
As the West seeks to further isolate itself from a dependency for critical materials from China and Russia and to fortify its own downstream production of batteries, Québec becomes all the more poised to take advantage of the North American vision to decouple battery supply chains.
"Over the past year, the industry has not gained significantly more knowledge about how the markets will play out in the long term, but we have seen considerable shifts in perceptions. People now accept battery materials as essential to the planet’s future, and see the decarbonization trend as irreversible and a priority."
Arne Frandsen, Co-CEO, The Pallinghurst Group
Lithium
In July 2022, Tesla CEO Elon Musk urged entrepreneurs to enter the business of refining lithium, telling his millions of devotees that this would be their “license to print money.” In many ways, he was correct. The lithium-ion batteries that go into electric vehicles are an order of magnitude larger than their cellphone counterparts, and the hundreds of billions of dollars being invested into EV developments are predicated on theoretical lithium supply. Over the next decade, global consulting firm McKinsey & Company forecasts continued growth of lithium-ion batteries at an annual compound rate of approximately 30%, meaning batteries could account for 95% of lithium demand by 2030. Despite these figures, there is limited grassroots lithium exploration currently underway in North America.
"As we move towards decarbonization, there is simply not enough known lithium to supply the demand created by regulations and laws that governments around the world are pushing to combat climate change," said Killian Charles, president of Brunswick Exploration. "Even if you were to turn on all existing lithium deposits we know of today, it would not be enough to meet this rapidly forthcoming demand."
Charles, whose company holds the largest lithium grassroots land package in the province, believes targeting pegmatites may hold the key. Brunswick Exploration has amassed a portfolio based on its search for the igneous rock composed of interlocking crystals, which is vastly underexplored for lithium when compared with brines.
Yet even in a mining favorable jurisdiction like Québec, it can take 10 years from a company’s production decision until the moment a truck laden with lithium-bearing minerals leaves its gates, given stringent permitting regulations. The closest Québec has to lithium production comes from Sayona Quebec, a joint venture owned 75% by Sayona Mining and 25% by Piedmont Lithium that purchased North American Lithium (NAL) in August 2021 with the hopes of recommencing spodumene concentrate production at the site as early as Q3 2022. The NAL restart has called for significant operational upgrades totaling roughly C$100 million.
“As societies are moving towards electrification, the number of lithium-ion batteries in circulation worldwide is drastically increasing. The need for lithium-ion battery recycling is growing exponentially, and managing waste from batteries at the end of their life has become a significant new environmental issue.”
Yves Noël, VP and Chief Business Development Officer, Lithion Recycling
The carbonate plant at the NAL site is part of Sayona’s goal to become a leader in the production of lithium concentrate and a major player in the manufacture of high-grade carbonate/hydroxide. Unlike gold or silver, which can be exported without transformation, lithium must be processed before use in the battery value chain. “The market is asking us to move downstream,” explained CEO Guy Laliberté. “For the moment, in March 2023, we will become the first and only spodumene producer in North America.”
To the west of Sayona’s Moblan high-grade lithium deposit sits Vision Lithium’s Sirmac property. President and CEO Yves Rougerie believes Sirmac, acquired in 2017 from Nemaska Lithium, could host another Moblan-type deposit given the geological similarities. “Vision has the only other lithium occurrences in the same greenstone belt as Sayona, and the main dike hosts a half million-ton deposit of high-grade Li2O,” said Rougerie.
Beyond traditional mining approaches for lithium, Québec is also home to an “urban mine” that recycles battery-grade materials to be reintroduced into the battery value chain. Lithion Recycling, a spinoff of Seneca that has developed a patented technology to extract critical battery materials from lithium-ion batteries and production waste streams, has received financial support from the Québec government as part of its interest in bolstering the province’s circular economy approach to resource consumption.
The Québec-based company can recover 95% of battery components before treating them to be reused in new batteries. Importantly, Lithion Recycling’s hydrometallurgical approach can work with different battery chemistries, meaning it will stay relevant as the landscape continues to unfold. The need for lithium-ion battery recycling is growing drastically, particularly as managing waste from batteries at the end of their life becomes a growing environmental concern. “In North America, approximately 100,000 tons of material are currently recycled annually,” said Yves Noël, the company’s VP and chief business development officer. “By 2040, over two million tons of lithium-ion batteries will need to be recycled annually in the US alone. In Europe, that volume is expected to be almost twice as large."
Lithion Recycling is part of a growing number of companies operating in the lithium-ion battery recycling market, many of which are based in North America, Europe, Australia, and Japan. According to Fortune Business Insights, the lithium-ion battery recycling market is projected to reach US$6.55 billion by 2028. For its part, Lithion Recycling hopes to commission 20 recycling plants in cities around the world over the next 15 years.
“No matter which lithium cathode chemistry you look at, there is always lithium, even in the newly developed solid-state batteries.”
Reiner Haus, Managing Director, ANZAPLAN
Nickel
Nickel plays a key role on the cathode side of lithium-ion batteries used by EV manufacturers. Within current battery chemistries, the metal makes up one third of nickel manganese cobalt cathodes and 80% of nickel cobalt aluminum cathodes. Battery makers pay attention to nickel given its correlation with a battery’s energy density, and thus with how far an EV can travel.
While considerably more nickel will be needed to supply the growing battery market, most nickel is not of high enough grade to suit this application. The war in Ukraine has only exacerbated the need for increased North American production of high-purity nickel; according to the IEA, Russia currently produces 20% of the world’s supply.
Glencore’s Raglan mine is Québec’s largest producer of nickel, operating four underground mines to produce nearly 40,000 t/y of nickel-in-concentrate. Raglan is located in the Cape Smith Belt in Nunavik, which hosts Québec’s other operating nickel mine, Nunavik Nickel. The belt has become known for its high-grade polymetallic nickel deposits, which is what caught the attention of Orford Mining, whose West Raglan project is a 707 square km property where the company will spend C$5 million on its summer 2022 drill program.
Beyond its exploration activities targeting nickel, Orford Mining made a major discovery in 2016 that led it to shift its attention to gold. “Nobody paid attention to gold in that area, as everyone was looking for nickel,” explained president and CEO David Christie. “It is a remote area, and unless you were already there, you would not be exploring for gold. Because we were already in the area looking for nickel, we decided to expand exploration for gold ore as well.”
Further south, Murchison Minerals is advancing its Haut-Plateau de la Manicouagan (HPM) project, which hosts a high-grade zone of Ni-Cu-Co mineralization at the Barre de Fer zone. According to president and CEO Troy Boisjoli, the HPM project has quadrupled in size since spring 2021, rendering 85% of the property subject to EM work to identify near-surface nickel-bearing sulfide mineralization. “We want to define near surface high-grade nickel resources at Barre de Fer to produce a maiden resource estimate for the zone by Q1 2023,” outlined Boisjoli. “We see very few nickel projects as advanced as we are, and we believe HPM has camp scale potential.”
Manganese
Manganese plays an important role in lithium-ion batteries as a stabilizer on the cathode side. Regardless of other components of the battery’s chemistry, manganese can be used to increase density, robustness, and rechargeability. Materials used to produce batteries must be readily available and cheap enough to scale, and this is where manganese shines. Automakers are increasingly turning to the abundant mineral as a means to make batteries and EVs affordable to mainstream buyers, as it can help replace expensive cobalt in battery cathodes. “Major companies like Tesla, Volkswagen, Stellantis, and BASF are all increasing their manganese consumption at a rapid rate,” commented Martin Kepman, CEO of Manganese X, who noted that new BASF EV batteries use 70% manganese in the cathode.
While manganese is one of earth’s most abundant metals, experts predict the deficit will grow to a magnitude of seven times production levels by 2030. Steel production accounts for over 90% of global consumption of manganese, with less than 2% being converted to high-purity manganese for the battery sector. Manganese X’s flagship Battery Hill project is one of the largest manganese carbonate properties in North America. The company took on the challenge of turning a 9% carbonate into a high-purity manganese sulfate EV-compliant product and collaborated with Vancouver-based Kemetco Research on a proprietary technology that bypasses the costly, high-energy process of turning product into electrolytic manganese metal (EMM). Kepman believes the project’s location will present a strategic advantage for downstream production in North American battery supply chains, as it is located just 10 miles from the US border, near the gateway to the St. Lawrence Seaways shipping channels in Maine.
"There is a wide range of applications for graphite, which is sold to the EV battery market but is also used in other industrial applications including ceramics, nuclear, plastics, pencils, and as expanded graphite for fire protection."
Gordana Slepcev, COO, Lomiko Metals Inc.
Graphite
While there is much focus on cathode materials like lithium, nickel, cobalt, and manganese, the predominant anode material being used in nearly all EV batteries is graphite. Lithium-ion batteries use graphite anodes because they are well suited to handle the flow of lithium ions during charging and discharging. China has historically dominated both natural and synthetic graphite production capacity, but the country is shifting away from being a low-cost exporter to the rest of the world in order to better supply its domestic value-add market. In this context, other regions are left scrambling.
“Looking at graphite, the European market currently calls for 150-180,000 t/y of spheroidized and purified graphite (SPG) or its synthetic equivalent based on plans already in construction,” commented Reiner Haus, managing director of ANZAPLAN, a consultancy and engineering company that focuses on specialty minerals and metals. “Production capacity for SPG in Europe is currently zero.”
Though investors have largely come up to speed on the longevity of lithium, Pascal Lussier Duquette, managing director of investment banking for metals and mining at BMO Capital Markets, sees a need for ongoing education about other energy transition materials. "If you spoke with investors five years ago about lithium, most of them would not understand or would be careful about investing in lithium companies. Today, lithium is well understood by investors, and good lithium projects can find capital," Duquette commented. "The same will happen for other energy transition materials, such as graphite and rare earth metals. The knowledge supporting these resources is still a bit behind the curve compared with lithium, but we can see the progression."
Nouveau Monde Graphite’s Matawanie project is currently the largest graphite mine being planned in the western world according to the company’s president and CEO, Eric Desaulniers. Nouveau Monde is working to update its feasibility study on the project, which they anticipate will produce 100,000 t/y flake graphite once running. To add to the attractiveness of the mine as an alternative supply of graphite against Chinese producers, Nouveau Monde has committed to having all equipment for its mining operations and core concentration and processing activities be fully electric within the mine’s first five years of production, which the company believes will reduce CO2 emissions over the mine’s lifespan by up to 300,000 tons.
Arne Frandsen is both chairman of Nouveau Monde and co-CEO of The Pallinghurst Group, which is the largest shareholder of the company. For Frandsen, the strategic opportunity at Matawanie is immense: “Everyone talks about lithium, nickel, cobalt, and copper on the cathode side, but few pay attention to the anode. This is a strategic mistake because you can build all the cathodes in the world, but without the equivalent number of anodes, you will not have the batteries. Anodes are made with a minimum of 85% graphite, meaning that half of the battery will be primarily graphite.”
In July 2022, Nouveau Monde expanded its graphite reach in Québec by entering an option and joint venture agreement with Mason Graphite to acquire a 51% interest in its Lac Guéret property. When the project was designed 10 years ago, it was amidst a climate of uncertainty regarding the longevity of the battery market. Today, the need for graphite is well recognized, and the activities planned to be undertaken within the JV reflect this. “Understanding the growing graphite market, we now prefer processing the ore on-site, as with bigger scale we can justify the required infrastructure developments,” explained Desaulniers. “We have leveraged our development, permitting, and process teams to design the project which we expect to start construction for in 2025.”
Closer to the border with Ontario, Lomiko Metals is advancing its 100% owned La Loutre property in the Laurentides administrative region of Québec. Its PEA published in July 2021 outlined a 15-year mine life of approximately 100,000 t/y graphite production. The company has also acquired six new graphite properties in the Grenville belt, all within 100 km of La Loutre, to create a pipeline of graphite properties. “We continue to test the graphite at La Loutre to develop the optimal processing required to produce very high-purity, battery-grade graphite concentrate as our end product,” said Gordana Slepcev, the company’s COO. “In the future, we will also look at vertical integration where we could be producing spherical graphite or working with battery manufacturers.”
From lithium to nickel, manganese, and graphite, Québec’s pipeline of exploration opportunities is particularly enviable at a time when countries are far more concerned about securing domestic supplies of critical and strategic resources than in recent years.