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Lithium plant developer zeros in on Thunder Bay refinery site

Avalon Advanced Materials making purchase offer on city property to start refinery construction by 2023
Avalon Advanced Material core shack
(Avalon Advanced Materials photo)

The developer of a much-anticipated lithium processing plant in Thunder Bay said he’s narrowed down his city-wide search to one property that fits the bill.

But Don Bubar, president and CEO of Avalon Advanced Materials, isn’t disclosing the specific site just yet as his company is in the process of making a purchase offer to the property owner.

Bubar delivered an update on Avalon’s Separation Rapids Project in northwestern Ontario and its refinery plans for Thunder Bay with an online presentation at the Emerging Growth Conference last week.

“It’s all coming together pretty nicely,” said Bubar.

2022 stands to be a breakout year for the Toronto junior miner, which has been drilling and exploring at its Separation Rapid lithium project, near the Manitoba border, for more than 20 years. 

The company plans to bring Separation Rapids, 70 kilometres north of Kenora, into small-scale production later this year. The samples they'll be generating will be shared with potential customers in the specialty glass and ceramic markets. They hope to start making some early sales soon.

Separation Rapids is a rare pegmatite deposit enriched in lithium minerals, namely petalite and lepidolite, highly coveted ingredients for those in the electric vehicle battery sector and in glass-ceramic manufacturing, two distinct markets that Avalon wants to serve.

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

The quickening pace to advance North America into a net-zero greenhouse gas emitting economy has suddenly put critical mineral resource projects like Bubar’s on the fast-track to production.

Some 500 kilometres away in Thunder Bay, the company wants to establish a lithium chemical processing plant in a city where there’s good rail and marine access to send battery-grade material to the market. 

Avalon ambitiously aims to start construction of the refinery some time in 2023 and have it producing lithium hydroxide for the car and battery makers by 2026.

The company first announced those plans in late 2020. While the initial news splash caused plenty of local excitement, things appeared to stall after Avalon’s project partner, Rock Tech Lithium, bailed on the joint venture to pursue manufacturing opportunities in Germany.

But Bubar pivoted and brought in Essar Group, a Mumbai, India-based global industrial conglomerate, as a strategic investing partner. Essar will supply the biggest chunk of capital for the development and become a co-owner. 

Avalon announced the signing of a binding letter of intent with Essar last April and still has to finalize a formal arrangement for financing.

Earlier this year, the total tab on the combined project stood at $514 million. That figure has since been upsized to $900 million, according to Avalon’s latest estimates.

At $600 million, Bubar said the refinery is, “by far,” the most expensive missing piece in the puzzle toward setting up a made-in-Ontario critical minerals supply chain, something federal and provincial politicians highly desire. 

Additional project capital could come from senior levels of government. Both Queen’s Park and Ottawa have tabled critical mineral strategies and pledged to provide funding support for critical minerals projects.

Once the refinery property is secured, Bubar said feasibility studies would start this summer to finalize their business and development models for the mine and the refinery.

Bubar emphasized the lithium business in northwestern Ontario is a growth industry that only stands to get bigger. He boldly predicted it will create a new economy in Thunder Bay, surpassing the traditional forestry sector.

His vision with the refinery is to establish a central processing hub that will serve lithium miners across the region.

Bubar explained Separation Rapids would provide the initial refinery feed that will open the door for other producers to follow.

Bubar said there are hundreds of lithium pegmatite resources throughout the Canadian Shield that offer many resource development opportunities in the northwest.

Lithium pegmatites can be mined in very low impact and sustainable ways, he said. There’s nothing toxic in the pegmatite rock that causes any environmental harm once the rock is disturbed through mining.

“If lithium gets in the water, that’s good for human health,” Bubar said.

Almost everything in the rock at Separation Rapids is a potential saleable byproduct, he said, as there’s also some tantalum and rubidium in the mix, both industrial minerals that are much in market demand.

What little mine waste is generated can be used as aggregate.

Bubar said these deposits don’t have to be developed as large open-pit operations with huge environmental footprints, but can start as small quarry operations that grow as the market demands.

It’s why Bubar is encouraging First Nation communities to get involved in prospecting and in developing their own lithium operations.

To get the message out, Avalon has recruited former Nishnawbe Grand Chief Harvey Yesno as a board member.

To get the ball rolling near Kenora, Avalon extracted a 5,000-tonne bulk sample at Separation Rapids last year and purchased a small separator plant to provide samples to the high-strength glass and ceramic market, a little-known but highly innovative sector often involved in aerospace and automotive technology applications.  

Bubar confirmed there are many interested potential customers in the North American auto sector that are also keen to see samples of the refined product. He isn't dropping any names for confidentiality reasons.

But he expects to announce off-take agreements of the lithium hydroxide this year that should provide additional capital to get the operation started.

Besides Rock Tech Lithium, there are two other prominent lithium exploration outfits with very promising mine properties in the region.

Sudbury-headquartered Frontier Lithium has a pair of deposits at its PAK project near the Manitoba border. The mine developer is on its own separate path to test, design and build its own port-based lithium processing operation somewhere in Northern Ontario.

The other entry is Australia's Green Technology Metals, which is looking to fast-track into production one of its lithium properties in the Armstrong area, north of Thunder Bay. The company is also considering Thunder Bay as a processing centre to make battery material for the auto industry with material mined from its Seymour property.