Battery and Base Metals Production
The clock is ticking
A year after the lithium frenzy experienced in La Belle Province, the hangover is nothing short of brutal. In June 2024, lithium prices dropped below US$13,000/t, the lowest in over three years according to S&P Global Commodity. Experts also predict nickel prices will continue dropping in 2024, and the phrase “Will nickel ever recover?” is now a popular search on Google. In the critical minerals space, copper is the true silver lining in Québec, with bulls jumping deeper into the red metal amid supply challenges. And while explorers in the province also took a hit, they will be hoping that the underlying trend of the green energy transition will reinject a breath of confidence for investors.
Québec’s soil is rich in critical minerals needed for the green energy transition. Graphite, lithium, copper, niobium, and iron contribute to the province’s appeal in the global effort to decarbonize the economy. Yet, that effort has faced several setbacks in the past 12 months. While Québec will undoubtedly have a role to play in providing the minerals necessary for EVs, solar panels, and batteries, speed of execution in the race to market may hamper the province's ambitious strategy.
Reading the battery meter
In March 2023, the relaunch of lithium concentrate production at the Lithium North America (LAN) complex in La Corne, Abitibi-Témiscamingue, was supposed to mark the start of the Québec lithium chain revival. But the past 12 months forced actors to adapt to new conditions, as the maturing lithium market brought about a demand slowdown and a slump in prices, notably due to a slowdown in EV sales. While the latter are still projected to rise by 33% in 2024 according to Wood, this is nowhere near the annual growth rate of 71% seen between 2021-2023.
The lithium market shake-up notably affected Sayona. After turbulent years (falling prices, restructuring, acquisitions), Québec's lithium industry was off to a new start in 2023, marked by the March relaunch of lithium concentrate production at North American Lithium (NAL) complex in La Corne, Abitibi-Témiscamingue. An ongoing operational ramp-up at NAL resulted in record spodumene concentrate production of 29,610 t for the firm in June 2023. But the selling of shares by Piedmont Lithium in February coupled with market disruption sent the share price plummeting. Indeed, the persistent drop in prices led to an operational review of the NAL operation in January that saw the Québec CEO leave his position and 14 other management staff made redundant, as the majority of shareholders decisided to say “sayonara”. In April, Sayona sold its stake in copper-gold developer Troilus Gold to focus on its lithium assets.
One of the world’s largest miners, Glencore, also faced challenges in the past year. In February, the firm reported year-end declines in copper, nickel, and cobalt production. But in a troublesome year for nickel, the Swiss giant saw the completion of the largest investment of the past decade in Québec when it inaugurated the Anuri mine. The Anuri (meaning “wind” in Inuktitut) mine is a component of Glencore’s Sivumut, or “moving forward,” project in Nunavik, further showcasing its commitment to Québec as the firm divested other operations worldwide, notably in New Caledonia. With Québec ranking second in Canada’s nickel production chart, Anuri and Raglan will be essential operations for the country’s output in the metal mostly used for stainless steel, as output has constantly been down from the 200,000 t/y high in 2016 to just above 150,000 t/y in 2022, according to Ottawa numbers.
The only significant producer of natural graphite in North America, Northern Graphite, received in June a C$400,000 grant from the Québec government that will pay 50% of the expenses for geo-metallurgical and geo-environmental drilling to be carried out in 2024 at the Lac des Iles operation. The Lac-des-Îles mine in Québec is the only mine in Canada to have produced graphite by 2022. However, many other companies are working to advance graphite projects. Canada produced 13,000 t of natural graphite in 2022, an increase of 9,743 t over 2021. Beijiing-related threats, that will be analyzed below, have sparked an urge among policy-makers and producers alike to ramp up graphite production, with the metal accounting for close to 50% of materials needed in batteries by weight.
Finally, Québec is gearing up to revolutionize the green steel industry. In 2023, Rio Tinto and H2 Green Steel, entered into a multi-year agreement for the supply of high-grade direct reduction iron ore pellets from Rio Tinto’s Iron Ore Company of Canada (IOC) operations. In Fermont, Champion Iron will produce one of the purest iron concentrates in the world at Bloom Lake. The firm announced a 40% resource increase at the asset, in the same year when Québec’s government added high-purity iron to its critical minerals list. Looking forward, this recognition will help support Québec’s position as a leader in the green steel supply chain, as high-purity iron plays a significant role in reducing GHG emissions in the steel industry.
Article header image courtesy of Sayona