Thunder Bay Could be Home to $400 MILLION LITHIUM REFINERY

MINERAL RESOURCES, LOCAL INFRASTRUCTURE AND PROXIMITY TO NORTH AMERICAN AUTO MANUFACTURERS MAKES THUNDER BAY A NATURAL CHOICE

By Don Norman

An aerial view of Avalon’s Separation Rapids Lithium Project. Credit: Avalon Advanced Materials

Back in November of 2020, a letter of intent signed between Rock Tech Lithium and Avalon Advanced Materials, announcing they would work together towards establishing a lithium battery materials process facility in Thunder Bay, made headlines in Canada’s mining press.

The facility would be designed to accept lithium mineral concentrates from Avalon’s Separation Rapids lithium project (70 km north of Kenora) and Rock Tech’s Georgia Lake Lithium Project (145 km northeast of Thunder Bay) to produce lithium ion battery materials with the specifics to be worked out.

“Northern Ontario has the potential to become a major producer of lithiumion battery materials, including cobalt, nickel, graphite and manganese, and Thunder Bay is an ideal central location to serve as a hub for establishing these supply chains,” said Avalon President and CEO, Don Bubar in the release. “We look forward to working with Rock Tech to advance this exciting opportunity to help establish a new lithium supply chain in Canada that can also provide a secure supply source for Canada’s European and international allies.”

While the Thunder Bay plant was the focus of the announcement, the goal for Rock Tech has been to establish a plant in Europe first to take advantage of the more advanced electric car infrastructure and subsidies available in the EU. So, not long after the November announcement, Rock Tech began a feasibility study to determine the viability of a €470M ($670M CAD) lithium converter plant in Europe. By October 2021, they announced they had acquired a site in the town of Guben in the state of Brandenburg, Germany and planned to be in production by 2024.

In the meantime, Avalon was working hard to firm things up domestically. They signed an MOU with Fort William First Nation in March 2021 with the goal of establishing the processing plant on their industrial lands and began to actively engage with potential end-users of the lithium battery materials products to secure a firm offtake commitment.

So, while Rock Tech were busying themselves with their proposed European plant, it appeared that Avalon was doing most of the heavy lifting in terms of the Ontario plant.

Avalon’s Separation Rapids lithium deposit is relatively rich in high-purity petalite, a mineral prized highly valued for use in glass ceramics.

The Prospector made several attempts to confirm Rock Tech’s commitment to the project, but we received no response. However, as recently as November 2021, in a Bloomberg.com interview, the company’s CEO, Dirk Harbecke, spoke about shipping the lithium mined from their Georgia Lake site to their proposed European converter plant and said, “We also plan to set up a converter in Thunder Bay that would then use this material. But for the first years, because the European market is more advanced in terms of e-mobility and penetration of electric cars, we have decided to ship this spodumene as a bulk material to European ports and build in Eastern Germany the first converter on the European Continent.”

So, despite being heavily immersed in the German plant, Harbecke’s comments clearly indicate the plan for a Thunder Bay refinery was still on the table.

Then, in January 2022, a news story appeared in Northern Ontario Business saying that Avalon had begun “trolling for new partner” to build the Thunder Bay lithium processing plant.

“ I THINK IT’S A GROWTH INDUSTRY THAT CAN ACCOMMODATE MORE AND MORE POTENTIAL PRODUCERS OF THESE PRODUCTS AND BY-PRODUCTS... THERE ARE LOTS MORE UNDEVELOPED LITHIUM RESOURCES IN NORTHWESTERN ONTARIO. ”

-Don Bubar, Avalon President and CEO

The Ontario Prospector spoke with Avalon’s CEO and he confirmed that the company is indeed seeking a new investing partner that is ideally an aspiring battery manufacturer. “Having a partner on the refinery is pretty important. It’s not cheap to get a big process facility established for this,” explained Bubar. He recalled that Rock Tech’s CEO Dirk Harbecke approached him at the PDAC in March 2020 (when the show was still live and in person). “We thought we could partner on it. But they’ve had some changes in terms of how they’re looking at getting production started, and they’ve been focusing on doing all the processing in Europe. And they’ve got a lot of support there for it.”

But it’s more than that. The fit wasn’t perfect to begin with. “You have to understand that there are different forms of lithium battery materials products,” explained Bubar. “You design your process and the final product to meet the needs of the customer that you’re going to sell to, which is why getting an initial off-take commitment is so important. It looked like they were going in a slightly different direction on product type than we were.”

There were also a geological differences in the lithium deposits each company was working with. “We have different mineralogy in our resource. They have a pretty standard spodumene pegmatite,” explained Bubar. “Ours is a highly evolved LCT type pegmatite that has contains a high purity lithium mineral called petalite and another lithium mineral called lepidolite.” Petalite is highly valued for glass ceramics because of its purity. On the other hand, garden variety spodumene (something closer to Rock Tech’s resource) typically contains some iron impurities that make it unsuitable for glass ceramics. “Those [impurities] need to be removed in the processing to make the battery materials, as well,” he explained. “The process, we have innovated for our refinery is a little different than most others; it involves recycling the solvent, sulfuric acid, so there will be no waste of any consequence, just a little bit of high-purity aluminum silicate that will likely be saleable as a by-product.”

All that being said, Bubar hasn’t ruled out some kind of working relationship with Rock Tech. “The other thing you can do is produce an intermediate product like lithium sulphate that can then be used to make a final derivative product that the individual buyer wants. We haven’t talked to them much lately, but that’s one of the possibilities we’re looking at now,” he said. “It just depends on who we end up getting the firm off-take commitments from. We would prefer a partner that’s more interested in the product for its own downstream uses, not just another mining company.”

But since Rock Tech hasn’t ruled out a refinery in Thunder Bay and Avalon is looking for a partner to move forward on their own refinery, we asked Bubar if there’s a possibility that we might see two lithium refineries in Thunder Bay. “Or more,” he responded. “Once you get started here, I think it’s a growth industry going forward that can accommodate more and more potential producers of these products and by-products since there are lots more undeveloped lithium resources in Northwestern Ontario.”

Bubar said the scale of the plant he envisions may not carry the same price tag as Rock Tech’s Brandenburg plant. “Scale impacts the costs for sure. And they’re probably looking at something much bigger than we are at the present time,” he explained. “But you’re always looking at several hundred million dollars, for sure.” When pressed, he estimated Avalon’s plant will likely cost between $300 and $400 million.

And therein lies the issue. It’s obviously going to be difficult for a small cap company to try to raise that kind of money on its own, hence the need for a partner.

While Avalon hasn’t confirmed its partner yet, it does have a lot of interest and there is also the possibility of securing some government funding for the project. One of the reasons Rock Tech moved forward with their plan in Guben was because of the attractive regional government subsidies. Bubar said government support for a facility in Thunder Bay is also looking promising.

Assuming a partner (or funding) can be secured, Avalon’s goal is to have a facility built in about three years time. “We’re ready to go in terms of getting it built,” said Bubar. “And the resource we have is ready to go too, in terms of producing concentrates.” He said they may even begin producing concentrates in the next year or two. “We’ve got huge interest just for the petalite mineral concentrate from end users in the glass ceramic industry.”

Bubar explained that the production plan will be based on a twostep process. “We’ll produce the concentrates at our Separation Rapids site, and then we’ll start using the refinery to produce whatever form of battery material we get the biggest order for, or an intermediate product,” he said. “We’re just now getting close to the finish line on deciding that.” Once that is established, the company will do a feasibility study to finalize its production model and cost estimates. “That won’t take very long. As soon as we get the order, we’re ready to get started.”

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