Battery Metals Production
Building a local, secure and sustainable battery value chain
The race to become the world’s biggest producer of EVs, batteries, solar panels and wind turbines is on. Global financial markets are progressively factoring climate risk into investment choices, with intelligent investments shifting from assets incompatible with a shift to a net-zero environment towards more aligned opportunities.
The following chapter will try to assess Québec's role in producing materials to feed the ongoing battery metals frenzy worldwide, and how the province can – and must – leverage its mineral potential to set itself in pole position to ensure a successful green transition. The province’s ground is rich in 30 commodities, among them almost all of those commonly called battery metals. This home advantage is key, particularly considering the findings of the July 2023 Energy Transitions Commission (ETC) report that states: ‘Scaling supply rapidly enough to meet demand growth between now and 2030 will be challenging for lithium, copper, nickel, cobalt, graphite.’ In North America, Québec is either the sole producer or a developer of each of the four metals just cited.
North America is at a turning point in its regional critical minerals strategy. A study from a Chinese university – reviewed by the Financial Times – shows that Chinese investment in foreign mining projects topped US$10 billion in H1 2023, more than the whole of 2022 combined. Fears over China’s splurge have prompted many countries, including Canada, to review foreign direct investments emanating from Chinese entities, particularly in areas such as critical minerals. The Canadian Critical Minerals Strategy highlights the country’s determination to bolster the production of minerals that are the building blocks for its green economy. From extraction to recycling, and particularly at the production stage, Québec has a unique opportunity to stand out, as the province is already a producer of three of the main battery metals.
Lithium
A new producer emerged in the Canadian lithium scene in 2023. In March, Sayona and Piedmont Lithium announced the successful restart of production at the North American Lithium (NAL) complex at La Corne, Québec. In August, the leading producer of hard-rock lithium in North America delivered the first shipment of 20,500 t of lithium spodumene concentrate. Powered by renewable hydroelectricity, NAL is ideally located with close access to rail, highway, and port infrastructure. Summed up by Sayona Mining’s CEO, Guy Belleau: “Québec is the place to be in the lithium space, and Sayona has the potential to be a leader in North America with over 30% of total hard rock lithium resources on the continent.”
Québec thus became home to the only major source of new spodumene concentrate expected in the continent in the years to come. NAL eyes a yearly production of 260,000 t of spodumene concentrate (SC6). Such figures are needed for society to successfully achieve the green transition, with the International Energy Agency forecasting that lithium demand will have to grow 26-fold to meet the 2050 net-zero targets.
In the future, the firm plans to grow beyond the production stage. Sayona intends to become fully integrated in the battery value chain, and use its lithium produced locally to feed Québec’s ever-hungrier EV market. Sayona’s partners, Piedmont Lithium, struck a deal with LG and Tesla to deliver lithium concentrate downstream. A preliminary study in June 2023 demonstrated the downstream potential at NAL, with Sayona now considering a separate carbonate processing plant as early as 2026.
With more lithium projects poised to enter production – such as Patriot Battery Metals’ Corvette flagship in James Bay – Québec is likely to carve itself a bigger slice of the global lithium market in the years to come. Guy Belleau detailed the factors underpinning the region’s potential to align itself with main producing jurisdictions in China, Chile, and Argentina: “I strongly believe that Québec could become one of the major lithium hubs in the world. We have clean energy with hydroelectricity, we have universities, talent, and power to become a world leader as a lithium producer.”
Québec’s status as the lithium capital of Canada means that the province will be instrumental in leading Canada’s charge in solidifying its battery value chain in the months to come. Sayona’s ambition to grow downstream highlights that balancing scale, size, and expertise will be the key to transforming lithium into a finished product after extraction within Québec. This dynamic also led to the US$10 billion merger between Allkem and Livent, creating a new giant in James Bay: the former has the financial resources to develop a mine, and the latter the capabilities for secondary processing.
Overall, Québec is seeing unmatched activity in its lithium industry, sustained by the province’s strong institutions, a unique operating environment, and the most compelling investment case for foreign investors wishing to see input capital in decarbonization-related opportunities.
Nickel
A Tesla battery requires about 50 kg of nickel, with the element boasting the property of being infinitely recyclable. Beyond those candid facts, a 2022 report by Australia’s National Science Agency indicated that the world will need about five times as much nickel (48,006 kilotonnes) than it is currently producing to meet global demand by 2050. Pierre Barrette, VP Raglan Mine, Québec’s largest nickel producer, touched upon the fundamentals: “Nickel is a strategic metal for the future and the planet’s decarbonization ambitions. Today, the battery business is taking a growing part of the nickel demand. The world demand sits at about 3 million t/y of nickel; we think it will grow to 5 million t/y by 2030, with most of the growth coming from the battery business.”
Operated by Glencore, the fourth largest nickel producer in the world, Raglan has produced over 40,000 t/Ni p/y for the past five years, and is now looking towards the future. With less than 20% of the property having been explored at depth, Pierre Barrette and his teams are now moving towards the second phase of the mine (called the Sivumut project, meaning -‘moving forward’ in Inuktitut) to extend the operation’s life beyond 2040. The project will leverage the existing infrastructures at Raglan, namely a concentrator, housing, port facilities at Deception Bay, air and land access, and will treat wastewater using Raglan Mine’s existing system. Barrette updated: “These two phases represent an investment of about C$600 million. This project kicked off in 2018, and we are now nearing completion as one of the zones should be in full production by early 2024.”
With around 55,000 t/Ni annually, Québec accounted for 42% of Canada’s total nickel production in 2021. Looking beyond 2023, despite the effects of the war between Russia (the third largest nickel producer) and Ukraine still being felt, resilient nickel prices and a robust demand outlook will likely boost investment in the best nickel operations and projects in the world.
Graphite
Graphite accounts for close to 50% of materials needed in batteries (by weight). With the lithium-ion battery market poised to grow at a CAGR of 19% up until 2030, North American policymakers and mining executives are acting to develop a local value chain capable of competing with China, which currently accounts for 70% of global graphite production.
Northern Graphite Corp will be the key player to watch in the coming months and holds the key to a North American graphite value chain. The firm acquired the Lac des Iles mine Graphite – the only significant graphite-producing operation in North America – in 2022, and kicked off a program to increase production, reserves, and mine life in May 2023. The operation currently produces 15,000 t/y of graphite concentrate. Beyond production, the firm’s integrated strategy aims to feed the graphite from Lac des Iles (and other miners) into its proposed battery anode material plant in Baie-Comeau, scheduled to supply 200,000 t/y in battery anode material (BAM) for the North American battery market.
With battery raw material demand poised to grow at least fivefold to feed all the mega factories being built to support the green transition, no battery mineral requires a larger production increase than graphite. With surging EV sales and graphite prices and valuations remaining relatively low, Kirsty Liddicoat, Northern Graphite’s COO, touched upon market fundamentals: “Simply put, there is not going to be enough graphite production to support the green energy transition and reach net-zero targets for the planet. In North America, the deficit is even larger. The demand for battery anode materials due to the shift to EVs will in itself drive graphite demand up 1,000%. Graphite is 48% of the anode and conservative estimates suggest graphite production needs to grow threefold by 2030 to support that shift.”
The strategy put in place in Québec a few years back to develop a fully integrated battery vehicle chain is starting to materialize. In 2023, Northern Graphite multiplied talks with car manufacturers looking to secure supply, and Nouveau Monde Graphite entered a commercial framework with Panasonic. NMG, also received a US$50 million investment from Mitsubishi, Pallinghurst, and Investissement Québec, once again highlighting the role the province’s institutions play in the success of its mining strategy. Kirsty Liddicoat expanded on Québec’s role in decarbonizing the world: “Québec has shown itself to have the political will to champion the success of the energy transition. That is the reason why we are building what will be the biggest battery anode processing facility outside of China here.”
Adding downstream capabilities to production efforts will remain the way forward for Québec’s battery metals producers. As the market for nickel, lithium, and graphite doubled between 2017 and 2022, to surge to US$320 billion today (according to the IEA), Québec’s producers are intent on onshoring upstream and downstream capabilities to offset the impacts of volatile prices, supply chain bottlenecks, and geopolitical turmoil.
Article header image courtesy of Sayona and Piedmont Lithium Separator image courtesy of Glencore