Canada’s resources are on the radar of international automakers and battery cell manufacturers that are lining up materials to power the transition to electric vehicles.
But as global investors descend on mining developments in Ontario, Quebec and beyond, governments and local miners are taking early strides to ensure that minerals are processed in Canada.
But this “has always been a totally foreign concept to the traditional mining industry,” said Donald Bubar, president of Avalon Advanced Materials Inc. “It was only ever about: produce it, ship it offshore.”
Strong demand for EV battery materials creates the opportunity to rethink this model and bring refining jobs to communities that have typically been cut out of the value chain, Bubar said.
George Pirie, Ontario’s minister of mines, acknowledged that the province’s mining sector has a history of favouring raw-material exports over processing.
“That’s certainly the legacy,” he told Automotive News Canada, but the government is moving “aggressively” to change this.
Pirie pointed to progress securing lithium refining operations for Ontario, and to the provincial backing for Electra Battery Materials Corp., which is scheduled to open a cobalt refinery in Temiskaming Shores, Ont., in spring.
“We expect the pace to increase exponentially [for] that type of activity in northern Ontario,” he said.
MINE HERE, REFINE HERE
Avalon is among the miners pursuing such a project. The company is developing a mine north of Kenora, at the western edge of Ontario. It plans to carry out an initial processing step at the mine site to create lithium concentrates from deposits called pegmatites.
Under the province’s legacy mining model, they would then have been exported for further processing overseas before reaching industry. Avalon, however, is developing a refinery 550 kilometres east in Thunder Bay, Ont., to bring the concentrates up to battery-grade. The company is currently working to acquire an industrial property in the city to build the refinery, which would also serve other local mining companies developing other deposits nearby, Bubar said.
“Not only is [Thunder Bay] the transportation hub for northwestern Ontario, but because of its central location relevant to dozens and dozens and dozens of lithium pegmatites, we can become a regional facility to accept concentrates from other new producers.”
The battery-grade lithium would then move downstream to precursor and cathode active materials plants, where it would be blended with other metals before being integrated into battery cells. Three such plants in Ontario and Quebec are under way.
Existing Ontario legislation could be used to spur more early-stage processing projects such as Avalon’s. Section 91 of the province’s Mining Act stipulates that companies mining ore in Ontario must treat and refine the material in Canada.
“It’s there to try to create more added value to the mineral resource,” said Chris Hodgson, president of the Ontario Mining Association.
EXCEPTIONS TO THE RULE
But the regulation does leave the door open to exemptions.
Permission to export unprocessed material is granted at the discretion of the provincial Cabinet, Hodgson said. Exemptions are not unheard of, but not common, he said, with companies typically needing to demonstrate why they are unable to refine within Canada.
In Quebec, Canada’s other leading battery materials jurisdiction, the provincial mining act “contains certain particularities concerning processing,” said Eric de Montigny, a spokesman for the ministry of natural resources and forests.
“[It] provides the government with the power to require, on reasonable grounds at the time of entering into the [mining] lease, the maximization of economic benefits in Quebec from the development of mineral resources authorized under the lease.”
The province works to secure investment in Quebec across the “entire mineral process” under these rules, de Montigny said. Quebec also launched both critical minerals and battery industry strategies in 2020 with the goal of developing a footprint in both sectors.
No such processing rules exist at the federal level, said Anthony Ertl, a Natural Resources Canada spokesman. Ottawa does emphasize processing through financial backing, however.
“Federal funding is contingent on demonstrating benefits to Canada and Canadians, which could include new jobs, anchoring a new sector or industry, and enabling innovative technology, in addition to processing or refining,” Ertl wrote in an email to Automotive News Canada.
The federal government’s $3.8-billion Critical Minerals Strategy, released in December, acknowledges Canada's current lack of processing capacity for materials such as lithium. It recommends Ottawa focus on supporting companies actively developing processing plants, but does not address the prospect of restricting exports of raw resources.
TWO AGREEMENTS, NO REQUIREMENTS
In two recent agreements, processing requirements fell by the wayside.
Memorandums of understanding that Ottawa signed in August with Mercedes-Benz Group and Volkswagen Group contained “no contingencies requiring the creation of processing and/or refining jobs,” Ertl said.
Since then, Mercedes-Benz has signed a lithium supply deal for its European operations with Vancouver-based Rock Tech Lithium Inc. The company is developing a mine in northern Ontario, but its near-term plans are to refine the lithium in Germany.
Rock Tech has limited capital to work with, said André Mandel, the company’s vice-president of marketing and communications. With the European market tracking ahead of North America on EV adoption, Rock Tech opted to prioritize its refinery at the eastern edge of Germany first.
Longer term, Mandel said, the company views another refinery in Canada as a “very good option.” But in the meantime, it will explore securing an exemption under the Ontario Mining Act that would allow it to send shipments of Ontario-mined lithium to Germany for final processing.
Among advanced-stage Canadian lithium developments, Rock Tech, in the near term, is an exception in steering away from local refining.
In Quebec, Australia’s Sayona Mining as well as homegrown Nemaska Lithium Inc. each plan refineries to complement lithium mines in the province. Snow Lake Lithium in Manitoba also looks to build a Winnipeg plant to refine product from its mine in the central part of the province.
As with Avalon, Frontier Lithium — another aspiring producer, based in Val Caron, Ont., just north of Sudbury — is also exploring a refinery in Thunder Bay.
As mines and accompanying processing projects advance, the excitement around critical minerals is building in northern Ontario, said Pirie, Ontario’s first minister focused solely on mining in more than 50 years. Aside from jobs, the opportunity to be a part of decarbonizing the global economy is creating a “renewed sense of purpose,”specially for young people, he said.
“What we’re doing right now is developing the sources of fuel for the next generation,” Pirie said. “These fuels aren’t going to be coming from the Middle East or anywhere else. They’re going to be coming from our own backyard.”
