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Thunder Bay edges closer to building a lithium processing plant

Avalon Advanced Materials in talks to secure supply agreement with South Korean battery maker LG Energy Solutions
T-Bay north core 1
(Northern Ontario Business file photo)

South Korean lithium-ion battery maker LG Energy Solution (LGES)  is looking to Northern Ontario to secure its raw material supply chain..

Hours after inking a three-year cobalt deal with Electra Battery Materials to source cobalt sulfate from its Temiskaming refinery starting next spring, LGES has entered into negotiations with Kenora lithium mine developer Avalon Advanced Materials to supply them with battery-grade lithium hydroxide by 2025.

It could secure a funding partner that will help Avalon build a much anticipated lithium refinery in Thunder Bay by next year.

In a news release, Avalon said it’s signed a non-binding memorandum of understanding (MOU) with LGES that now kicks off discussions to reach a more definitive supply agreement. Avalon is confident that will be “finalized in no later than six weeks.”

Toronto-based Avalon wants to establish a lithium plant in Thunder Bay to service the battery and electric vehicle manufacturers in southern Ontario and elsewhere. Avalon said in a news release that this preliminary agreement will accelerate its plans to do that. 

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Avalon said the MOU “helps advance the company's vision to develop a sustainable and secure domestic lithium supply chain. Entering into a commercial relationship with a proven manufacturing leader like LGES will help enable that vision.” 

Seoul-headquartered LG is a leading global manufacturer of lithium-ion batteries for electric vehicles and energy storage systems. 

This year, Avalon CEO Don Bubar has been looking to secure major supply agreements with global manufacturers and raise money that will help him build a lithium hydroxide refinery in the northwestern Ontario city. Bubar previously said he wants to start construction next year and begin producing lithium hydroxide for the battery and car makers by 2026.

Last month, Bubar said he made a purchase offer on an undisclosed industrial brownfield property in the city.

The Avalon news release said the MOU was signed during the visit of South Korea's President, Yoon Suk Yeol to Canada, at a ceremony supported by the Korea Mine Rehabilitation and Mineral Resources Corporation (KOMIR), Natural Resources Canada (NRCAN) and other partners.

Under the MOU terms, Avalon would commit, for five years initially, to provide LGES with at least 50 per cent of its planned initial lithium hydroxide production from its proposed Thunder Bay facility, with the potential to increase production as demand grows. 

In the release, Bubar was pleased that the MOU may lead to a more substantial commercial deal by this fall.

"We are delighted to enter into this agreement with LGES to support our aspirations of establishing the mid-stream processing capacity in Thunder Bay to take advantage of the many lithium resources that occur in northwestern Ontario to create the supply chain for the emerging lithium-ion battery manufacturing capacity in southern Ontario. As was noted by Premier Ford, this creates a win-win for Ontario's economy in both the south and the north and will also create many new economic development opportunities for remote Indigenous communities."

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In a statement, LGES CEO Youngsoo Kwon mirrored his comments on their earlier cobalt supply deal with Electra Battery Materials about wanting to focus on the serving the fast-growing North American electric vehicle (EV) market. LGES and Honda Motor are partnering to build an EV battery plant somewhere in the U.S. by 2025.

"By constantly investing in upstream suppliers and establishing strategic partnerships with major suppliers of critical minerals, LGES will continue to ensure the steady delivery of our top-quality products, thereby further advancing the global transition to EV's and ultimately to a sustainable future."

Avalon’s Separation Rapids Project is 70 kilometres north of Kenora. It’s a pegmatite deposit enriched in lithium minerals, namely petalite and lepidolite, coveted by manufacturers in the electric vehicle battery sector and manufacturers of high-strength glass and ceramic.

The deposit has a 20-year mine life, according to a 2018 preliminary economic assessment.

Avalon has a contractor clearing an area near its proposed and permitted quarry site for a demonstration-scale plant that will provide samples for potential customers in the glass and ceramics market. Serving this specific market does not need a refining process. Milled product from the quarry can be sent straight to the customer.