Lithium Universe aims to accelerate clean energy transition and close downstream processing gap with new lithium hub

Lithium Universe (ASX: LU7) is advancing its lithium processing hub strategy in Canada, moving the company closer to its vision of accelerating the transition towards cleaner energy and providing critical materials for new-age batteries.

The company will complete a definitive feasibility study before year end to construct a 16,000-tonnes per annum lithium carbonate refinery in Quebec and is progressing engineering studies for the construction of a spodumene concentrator in the same region.

The battery-grade refinery is part of Lithium Universe’s strategy to build the Quebec lithium processing hub (QLPH) by 2027 on a CA$12.6 million plot of land at the Bécancour waterfront industrial park to help supply the world’s growing battery manufacturing sector.

It will be located in the same area as a CA$550m cathode active material (CAM) factory being built by General Motors and Posco Chemicals, which is slated for first production in 2025.

The park is also home to a CA$1.3 billion cathode factory owned by Ford and EcoProBM, which will produce 45,000tpa of CAM from 2026.

Both factories commenced construction last year and their close proximity to Lithium Universe’s proposed refinery location means they could potentially provide a ready market for its lithium carbonate product.

Swedish battery developer and producer Northvolt is also building a wholly-integrated lithium-ion battery gigafactory with an annual cell manufacturing capacity of 60 gigawatt hours near Montreal, to the southwest of Bécancour.

Industry experts

Lithium Universe chair Iggy Tan has assembled a team of industry experts to run the company, all of whom have proven track records in the construction and commissioning of lithium projects on time and on budget.

The so-called “Dream Team” is focused on closing the gap in downstream lithium processing in North America by building a refinery that will replicate the 17,000tpa Jiangsu lithium carbonate facility built for Galaxy Resources.

It plans to use the same engineering manager and key executives in order to minimise technical risks that have led to cost blowouts and delays on other lithium refinery projects in Canada and Australia.

“Having the right team with the right expertise and experience is key to successfully developing a highly technical and sophisticated project such as a lithium refinery,” Mr Tan said.

“Members of our management team have previously constructed, commissioned and operated similar lithium carbonate refinery operations [and this experience] will substantially lower the execution risks associated with this type of start-up.”

Reliable supply chain

Despite an anticipated increase in North America’s battery manufacturing capacity, the region’s lithium industry faces a significant challenge in establishing a reliable supply chain due to limited access to existing lithium converters and the low number of new converter projects in the pipeline.

This is being attributed to a lack of expertise and a series of recent failures and delayed start-ups in the sector, creating a looming gap in lithium conversion and processing.

Canadian federal and local governments have invested billions of dollars to support international companies willing to set up their electric vehicle (EV) battery materials operations in Quebec, creating new jobs and contributing to the province’s economic vitality.

“Given the significant downstream processing gap together with Canada’s rapidly expanding EV industry and the current reliance on Chinese lithium processing capacity, we [also] anticipate substantial support from Canadian governments and large regional players for this project,” Mr Tan said.

He estimated that 800,000 tonnes of lithium carbonate equivalent would be needed per year to satisfy growing demand in North America.

China’s lithium presence

China started establishing its presence across the lithium supply chain years ahead of other countries, securing new sources of raw materials through the acquisition of lithium mines worldwide and the development of its domestic resources.

The country presently hosts nearly 60% of the world’s lithium refining capacity for batteries, underscoring its predominant position in the supply chain.

There are concerns that China could exploit its control over lithium processing, similar to its actions in 2023 when it imposed restrictions on the export of gallium and germanium—elements vital to the semiconductor, EV and weapons industries.

Geopolitical tensions could escalate into a sanction-driven conflict, potentially leading to China halting the supply of refined lithium when the world’s automotive industry needs it to power the switch to EVs.

Policy shifts

As a way around this, some governments have come up with policies and strategic plans to support the expansion of their own country’s lithium refining capacities.

In 2019, Canada launched the ‘Mines to Mobility’ initiative to build a sustainable national battery innovation and industrial ecosystem.

By 2022, the initiative had attracted more than CA$7 billion in confirmed investments to capture opportunities in the sector.

‘Exceptional’ element

Lithium’s distinctive chemical properties are reported to make an “exceptional element” for battery applications.

It is classified as the third lightest element and the lightest among all metals, translating to a higher electric charge per unit mass compared to other metals.

In battery terms, this results in lithium having a remarkably high specific (or volumetric) capacity, signifying its superior ability to store electric charge.

Lithium-ion batteries are leading the transition to a rechargeable world, with the metal earning the title of the “white gold” or “white oil” of the 21st century.