In a significant development for Canada’s critical minerals sector, Frontier Lithium Inc. (TSX: FL, OTCQX: LITOF) has announced that both the federal and provincial governments intend to support its proposed lithium conversion facility in Thunder Bay, Ontario. This facility will be the first of its kind in Canada, marking a crucial step in strengthening North America’s energy and critical minerals supply chain.
Frontier Lithium is a pre-production mining company aiming to become a key supplier of premium spodumene concentrates and battery-grade lithium salts to the burgeoning electric vehicle and energy storage markets in North America. The company’s PAK Lithium Project, located in Ontario’s Great Lakes region, is a fully integrated lithium development initiative. This project is a joint venture between Frontier Lithium (92.5%) and Mitsubishi Corporation (7.5%), focusing on extracting lithium ore, producing high-purity lithium concentrates, and manufacturing battery-grade lithium salts through a downstream refining facility.
A recent pre-feasibility study by BBA E&C Inc. highlights the project’s potential, with a projected 24-year lifespan, a post-tax net present value (NPV) of US$1.74 billion at an 8% discount rate, and an internal rate of return (IRR) of 24.1%.
The federal and provincial governments’ intent to support this project is contingent upon customary conditions and the completion of contribution agreements. This backing signifies a major milestone in aligning Canada’s and Ontario’s critical minerals strategies, aiming to establish a robust ecosystem for critical minerals in Ontario.
The proposed facility is designed to convert lithium from the PAK mine project into approximately 20,000 tonnes of lithium salts annually, which could support the production of batteries for about 500,000 electric vehicles per year. Additionally, the facility will be capable of processing materials from other lithium resources in Canada and abroad, further enhancing its strategic importance.
Frontier Lithium has also announced a partnership with Mitsubishi Corporation to advance the Thunder Bay refinery proposal. Mitsubishi will initially acquire a 7.5% stake in the project for $25 million, with the potential to increase its share to up to 25% upon completion of the project’s feasibility study. This partnership underscores the significant investment and collaboration required to develop Canada’s critical minerals sector.
The development of this facility is expected to create hundreds of new jobs and bolster Ontario’s emerging end-to-end critical mineral supply chain. Ontario Minister of Economic Development, Job Creation and Trade, Vic Fedeli, emphasized the importance of refining critical minerals locally to protect jobs and support the province’s business environment.
As global demand for critical minerals continues to rise, with lithium demand projected to increase by 500% by 2050, Canada is poised to become a key player in the global supply chain. The government’s support for projects like Frontier Lithium’s underscores Canada’s commitment to developing domestic production capabilities for critical minerals, aligning with its broader economic and environmental goals.
Frontier Lithium’s lithium conversion facility in Thunder Bay represents a pivotal moment in Canada’s efforts to establish itself as a leader in the critical minerals sector. With government support and strategic partnerships, the project is set to play a crucial role in North America’s energy transition and economic growth.
