Lithium Universe Ltd has proceeded to the funding stage for its Bécancour Lithium Refinery after a definitive feasibility study (DFS) demonstrated the economic viability of the operation.
The company said the results of the DFS were positive and economically robust, offering strong potential even in a low-pricing environment for lithium products.
LU7 is employing a counter-cyclical strategy for the Bécancour refinery in Canada, developing the project ready for lithium’s next price recovery.
DFS financial modelling
Lithium Universe’s financial modelling points to a strong pre-tax net present value (NPV8) of US$718 million with an internal rate of return (IRR) of 21% and a payback period of 3.9 years.
That period is based on a price forecast of US$1,170 per tonne for SC6 spodumene concentrate and US$20,970 per tonne for battery-grade lithium carbonate (LC).
The current spot price sits at US$775 per tonne of SC6 and US$10,680 per tonne for battery-grade LC, although the DFS indicates the project would be able to break even at around US$740 per tonne of SC6 and US$14,000 for LC.
LU7 expects its operating costs to be about US$3,941 per tonne, with a capital cost estimate of US$549 million.
Overall, the company expects to produce annual revenue of about US$383 million and earnings before interest, tax, depreciation and amortisation of about US$148 million per year.
Addressing the lithium gap
“The strong NPV and returns for the project indicate an economically viable project and the board has made the Financial Investment Decision (FID), and the project is now proceeding to the funding stage,” Lithium Universe chair Iggy Tan said.
“An equity and debt adviser will be engaged to lead the funding outreach program aimed at securing strategic partners at the project level to support project financing.
“Initial discussions with various banks and debt providers have been encouraging. The company will continue discussions with interested OEMs with spodumene offtake supply seeking conversion outside of China.
“We are confident that the Bécancour Lithium Refinery, with an annual capacity of 18,270 tonnes, will emerge as a leader in producing green, battery-grade lithium carbonate.
“We recognized that bridging the lithium conversion gap in North America, leveraging our accumulated lithium expertise and the proven technology from Jiangsu, is a clear strategy.
“Our counter-cyclical strategy is centred on advancing projects during market downturns, allowing us to strategically position ourselves for growth as the market rebounds.
“We are dedicated to funding and constructing a proven, low-risk lithium conversion refinery in Québec, marking the first step toward establishing Québec as the lithium conversion hub for the Transatlantic region.”
Proven technology, extensive expertise
LU7 is confident its Bécancour refinery will overcome the global pattern of lithium conversion failures and start-up issues by using proven Jiangsu Refinery operating technology and employing extensive lithium industry experience.
The refinery will be a smaller off-the-shelf style plant compared to larger difficult-to-operate facilities, with an initial focus on lithium carbonate production to feed the lithium-iron-phosphorous (LFP) lithium battery market.
Situated in Québec with access to the trans-Atlantic lithium conversion centre, Lithium Universe’s refinery will be fed by stock from Canada, Brazil and Africa, leveraging cheap green power and cost-effective transport options to end market to achieve critical cost benefits.
Importantly, the project’s greenhouse gas emissions will be reduced by up to 95% due to the company’s plans to use Hydro Québec’s green energy.