Near-term Lithium Production in Quebec
Nemaska Lithium Inc. (TSX:NMX,OTCQX:NMKEF,FWB:N0T) is building one of North America’s richest and largest hard rock lithium mines and lithium salts processing facilities through a unique deposit in Nemaska and a state-of-the-art electrochemical plant in Shawinigan, both located in the province of Quebec, Canada. The project is permitted making it one of the next fully-integrated lithium salts suppliers in the world. Once in commercial production, Nemaska Lithium is projecting to be one of the world’s lowest cost producers of lithium hydroxide and lithium carbonate.
The global lithium market is expected to grow at a compounded annual growth rate (CAGR) of 12.93 percent between 2018 and 2022. The growth in the lithium market is due to the forecasted growth of electric vehicle (EV) sales; however, many analysts are concerned that the supply cannot keep up with the demand. According to Albemarle, the demand for lithium-ion batteries from the EV industry is expected to grow at an annual rate of 20 to 30 percent through 2024.
According to Nemaska Lithium’s 2019 technical report, the Whabouchi project has an expected mine life of 33 years and an initial payback period of 4.6 years. The project also features an after-tax NVP of C$2.3 billion (eight percent) and an after-tax initial rate of return (IRR) of 27.4 percent. With these encouraging numbers, Nemaska Lithium intends to resume construction on the mine in the near term with plans to commence production in 2020 at Whabouchi and 2021 for the electrochemical plant.
In the meantime, Nemaska Lithium is securing the necessary financing and off-take partners needed for success. To date, the company has entered into offtake agreements with Johnson Matthey PLC (LSE:JMAT), Northvolt and LG Chem Ltd. (KRX:051910). In addition, the company has financing agreements with Orion Mine Finance and SoftBank Group Corp. (TSE:9984). Through its Phase 1 Plant, the company can have its products verified by potential customers and finance the development of the mine and processing plant.
Nemaska Lithium Company Highlights
- Whabouchi is designed to be a vertically-integrated lithium project.
- Once the mine and processing facility are built, high-quality spodumene concentrate produced at the mine site is expected to be transported directly to the Shawinigan electrochemical plant to generate high-purity lithium hydroxide products.
- The project is expected to be North America’s richest and one of the largest reserves of lithium spodumene in the world.
- Whabouchi has a 37-million-tonne proven and probable reserves for an initial 33-year mine life.
- Whabouchi is forecasted to be one of the lowest cost producer of lithium hydroxide worldwide.
- Proprietary chemical process uses electrolysis. With electricity being the main input cost, which is $0.05 kWh in Quebec, the operating costs are low and predictable.
- Vertical integration, meaning the mine and therefore the source of lithium is 100 percent owned by the company, is a key factor in keeping costs minimal.