Lithium Universe Ltd (ASX:LU7, OTC:LUVSF) is positioning itself as a key player in closing the lithium supply gap in North America with its planned Bécancour Lithium Refinery project in Quebec, Canada.
With lithium demand set to surge due to the rapid expansion of battery manufacturing, the company’s strategic refinery project is aligned to supply the growing market while leveraging proven technology and industry expertise.
The Bécancour refinery starts with a more than 500 million tonnes resource at 1% lithium, which has more than doubled in the past year, and a Transatlantic supply sourced from Brazil, Canada and Africa – and more than 40 lithium companies in Quebec alone.
The refinery is based on the company’s proven Jiangsu design, which Lithium Universe has experience operating.
It is expected to produce 18,270 tonnes per annum of battery-grade lithium carbonate equivalent (LCE) when it’s up and running.
The refinery will process all spodumene types, with all programs to achieve battery-grade specs of 99.5% lithium trioxide and low critical impurities of fewer than 100 parts per million versus less than 250 ppm standard.
Massive gap between supply and demand
Downstream demand figures also work in LU7’s favour. The global demand for lithium continues to increase, driven primarily by the electric vehicle (EV) and energy storage sectors.
North America is experiencing a surge in battery manufacturing, with more than 20 manufacturers to add 1,000 GW to the grid by 2028.
This massive increase in demand is expected to outstrip current lithium supply capabilities, creating a significant supply gap.
There is predicted to be a tenfold increase in current capacity and the industry will need a projected 850,000 tonnes of LCE per year.
At present, North America lacks lithium converters, with only 100,000 tonnes per annum of converter capacity planned, far short of the needed supply.
The Bécancour refinery is strategically situated in Quebec, where it benefits from access to low-cost, green hydroelectric power, which significantly reduces operational costs and greenhouse gas emissions.
Decreased reliance on China
Lithium Universe also plans to take advantage of decreased reliance on Chinese lithium converters as North America aims to cut down on imports from Chinese-controlled supply chains due to tariffs – which are set to rise to 25% on processed LCE – and policy shifts.
In light of this, Canadian developers need downstream solutions.
With what it calls a transatlantic LCE conversion centre, LU7 is betting on access to cheap green power, nearby feedstock sourced from favourable jurisdictions and a decrease in transport costs of spodumene to end markets in North America.
With these end users qualifying for significant funding from the US Government’s IRA legislation, the incentives will be firmly in place.
On the midstream processing front, the company is in a strong position to corner the market, with no lithium converters currently based in North America and only 100,000 tonnes per annum of converters planned and a dearth of lithium refining experience or history.
It’s not easy for companies to bridge this gap. Lithium refineries are complex chemical businesses that can undergo failures and technical difficulties.
The company believes it takes years to establish and ramp up proven technologies.
Lithium Universe is led by a team of experienced operators with a strong track record in lithium project development.
Chair Iggy Tan and non-executive director Dr Jingyuan Liu have extensive experience in commissioning and operating world-class lithium plants, positioning Lithium Universe to successfully navigate the complex chemical processes involved in lithium refining.
Counter-cyclical strategy
The company has answers to all the big questions that are being asked about lithium production today, such as why it is building a plant in a depressed price environment which has seen other closures and failures – and why LCE and not hydroxide.
LU7 believes that the price environment will stabilise and recover, following three or four previous lithium cycles, and when it does, the refinery will be developed and ready for that price recovery.
The demand for the mineral from EVs and BESS growth is only going in one direction, and the company says the industry has ‘cleaned out all the debris’ in the lithium supply.
Where are things at?
The company has an application with Hydro Quebec for 22.5 MW of electricity.
It has completed an environmental survey which found there were no issues with the project proceeding. A surface water hydrology study has also been completed, along with a soil contamination desktop study. The company is now working with W8banaki First Nations peoples to garner heritage approvals.
With a robust preliminary feasibility study completed and offtake discussions underway, the Bécancour Lithium Refinery is set to play a critical role in meeting North America’s growing demand for locally processed lithium.
Read: Lithium Universe on track to release Bécancour Lithium Refinery DFS next quarter
