Lithium Universe plans to fill a big hole in the market by becoming a major North American provider of lithium carbonate. Pic via Getty Images
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Special Report: Forget lithium’s short-term malaise, Lithium Universe is looking to the avalanche of demand to come by playing a key role in enhancing North America’s battery supply chain.
In a major strategic update, the company led by lithium industry legend Iggy Tan and the team behind early moving EV supplier Galaxy Resources has outlined why their strategy to focus on lithium refining in the emerging hotspot of Quebec, Canada, could be on the money.
With a font of hard rock resources but absence of downstream conversion capacity, Lithium Universe (ASX:LU7) is looking to plug a worrisome gap by developing its Québec Lithium Processing Hub (QLPH), an independent 1Mtpa concentrator and 16,000tpa battery-grade lithium carbonate refinery.
Quebec’s James Bay has become a hotbed of lithium exploration, with over 500Mt of resources at economic grades of 1% Li2O or above, while over 20 major manufacturers are planning to deploy an estimated 1,000GW of battery manufacturing capacity.
Combined, Canada and the USA could become a battery manufacturing force outside of China, capable of meeting a significant part of the 4,700GWh per annum demand for batteries in 2030 estimated by McKinsey.
But there remains a substantial gap between those pillars – the refining of lithium ore into high-purity lithium carbonate, a key feedstock for lithium iron phosphate (LFP) batteries that are rapidly growing in popularity.
There are some very strong reasons why the company has made this its main focus.
On the supply side, James Bay has seen an increase in resources of more than 100% within the last 12 months. That’s across just eight companies, with more than 40 in the region.
That number is set to grow as drilling continues by both established resource owners and new players.
Meanwhile, battery manufacturing capacity could hit 1,000GW by 2028 and with a ratio of ~850g lithium carbonate equivalent (LCE) for every KWh, an estimated ~850,000t of LCE per annum would be required to satisfy demand in North America.
There are currently no operational lithium spodumene to LCE convertors in North America, LU7 notes, and just ~100,000t of conversion capacity slated for construction in the region.
Matters have not been helped by numerous lithium conversion plants worldwide encountering technical and start-up challenges over the past decade, with even established producers finding lithium conversion a challenging task.
To address this, LU7 has put together its ‘Dream Team’ of experts in hard rock lithium extraction and downstream conversion operations. With Galaxy, they previously spearheaded the successful construction of the Jiangsu lithium carbonate plant in China, using spodumene concentrate from the Mt Cattlin mine in Western Australia.
LU7 has also forged strategic partnerships with engineering consultants Hatch and Primero Group to leverage proven technology in spodumene concentration and lithium conversion design to minimise execution risk.
The company plans to replicate the design and operational methodologies implemented at Jiangsu in North America.
Doing so will help reduce the region’s reliance on Chinese suppliers, which aligns with both commercial and national security objectives.
LU7 has already signed an option agreement to acquire a commercial property within the Bécancour Waterfront Industrial Park for its proposed plant, planning to offer “take or pay” agreements with OEMs that incorporate risk-reducing mechanisms such as floor and ceiling prices.
Discussions have already started with potential offtake partners.
“Despite prevailing lithium market dynamics, Lithium Universe remains committed to building through the lithium market cycle, solidifying its pivotal role within the growing lithium supply chain in North America,” chairman Iggy Tan said.
“Leveraging strong tailwinds from the geopolitical shift towards onshoring battery production, the emergence of James Bay as a key lithium jurisdiction, and our strategic approach to addressing the lithium conversion capacity gap, we stand in a favourable position.”
This article was developed in collaboration with Lithium Universe, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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