Lithium Universe inks Canadian refinery chemical supply deal

Lithium Universe has inked a strategic chemical supply deal with Quebec-based logistics company Servitank which the company believes will improve the operational efficiency of its proposed Canadian lithium refinery project.

The partnership with Servitank, a subsidiary of Groupe Somavrac, has been formalised through a memorandum of understanding (MOU) and brings much needed expertise in chemical logistics and supply chain optimisation to the project, positioning Servitank as a key partner for Lithium Universe.

The primary purpose of the collaboration will be to safeguard the reliable delivery of vital chemical inputs for the company’s planned lithium refinery, where it is aiming to produce 18,270 tonnes of battery-grade lithium carbonate annually.

Servitank’s facilities at the Bécancour Port terminal and Trois-Rivières will play a pivotal role in managing the storage and transport of spodumene, a primary input for lithium production together with the development of new dedicated storage tanks for critical liquid and dry bulk chemicals.

Servitank will additionally be responsible for locking in locally sourced reagents within the Bécancour Industrial Park to up the project’s green credentials and reduce costs where possible.

As part of the ongoing sustainability drive, the pairing will jointly explore markets to handle the refinery’s secondary and waste product streams which may include using the alumina silicate by-products in cement production and sodium sulphate in the pulp and paper industry.

Lithium Universe chairman Iggy Tan said: “This partnership with Servitank is a significant step towards realizing our vision for the Bécancour Lithium Refinery. We are particularly focused on identifying a single logistic supplier capable of supporting us in sourcing most of our chemical reagents, which will simplify our supply chain and enhance operational efficiency. Together, we aim to bridge the lithium conversion gap and ensure a robust and responsible supply chain.”

Lithium Universe’s mission to produce lithium carbonate - a key component for the lithium iron phosphate (LFP) batteries - was recently given a massive boost after results of an upbeat prefeasibility study (PFS) delivered a forecast pre-tax net present value (NPV) of US$779 million (AU$1.2 billion) and an annual EBITDA of US$147 million (AU$226 million).

With capital costs of US$494 million (AU$760 million) and a payback period of 3.5 years for the 20-year operation, the project has an internal rate of return (IRR) of 23.5 per cent, assuming a medium price assumption of US$1170 (AU$1800) per tonne (t) for spodumene concentrate and US$20,970/t (AU$33,300/t) for battery-grade lithium carbonate.

Production costs are expected to remain consistent and low at US$3976/t (AU$6122/t) for the lithium carbonate, primarily because the refinery will be supplied with low-cost, green hydroelectric power provided by Hydro Québec and which will reduce greenhouse gas emissions from the plant by 95 per cent.

The company is aiming to reduce the construction risk of building a new refinery and ensure a reliable production process by using a project design that leverages proven technology from Galaxy Resources’ Hatch-built Jiangsu lithium refinery in China.

Hatch representatives Nicolas Paulin and Rob Piper have recently been at site to inspect conditions.

Lithium Universe is on a mission to address the growing demand for lithium in North America’s burgeoning battery manufacturing industry. With more than 20 battery manufacturers planning a combined 1,000GW of capacity by 2028, the company’s refinery is set to fill a critical gap in regional lithium conversion capabilities.

After taking something of a breather, lithium prices are starting to edge back again, with prices now 11 per cent higher than their lows of US$9800 /t and approaching US$11,000/t. Big name producers such as Mineral Resources and Pilbara Minerals recently flagged they expected gradually higher future prices from here.

While the lithium spodumene market has been at a low ebb of late, a generally improved market sentiment does appear to be returning gradually.

With a few big players going onto care and maintenance lately, the supply coming out of the market may have a positive impact on the price in the next couple of years, potentially even creating perfect timing for Lithium Universe as it looks to time the next lithium market run.

Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au