Canada Used To Provide A Lot Of World’s Lithium, But Can It Revive That?

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Lithium used to be used to treat mania and mood swings, and now its availability or lack thereof is making market swings. In the 1950s, Canada was actually a player in the international lithium market, with a mine in Quebec providing tons of the salt, then failing as the market failed. Fast forward to 2021, and lithium is a core component of the electrification of transportation, in all of our electronic gadgets and a lesser component for grid storage.

Canada actually has massive lithium reserves underground. Can it return to being, if not the king of lithium, at least a well-positioned pawn?

In addition to its history with lithium, Canada’s federal government established an initiative to try to kickstart battery manufacturing here, working with the mining industry to extract the various minerals required, something Canada has in abundance.

Rather absurd amounts of lithium are locked into the pre-Cambrian Shield. But here’s the thing. I know the pre-Cambrian Shield personally and deeply. I carried a lot of blasted hard granite chunks in North Bay, Ontario, landscaping a terraced set of walls on my parent’s property down to the flood plain below. It was from SAGE, the underground facility that used to watch for Soviet bombers coming across the North Pole and scrambling jet fighters out to intercept them. The US and Canadian militaries built a six-story office building on massive springs a quarter mile underground for the purpose, so there was a lot of rock left over.

And that rock is hard to mine. It’s some of the hardest rock in the world. It’s not like we don’t know how to do it, but there has to be a big payoff.

Making mining low-carbon is an understood challenge, and there’s lots of work done on that already. I consulted briefly to the Raglan Mine wind turbine deployment in Northern Quebec near the Arctic Circle (for those keeping track of wind energy working in icy conditions), and worked on a proposal for a net-zero mine in the Ring of Fire in Northern Ontario. I have also spent time looking at the adjacent market of pumped hydro site tunnel boring, so I know more than the average bear about the subject, while being far from an expert.

Nemaska Lithium was working to get a mine into operation, one of the biggest in the world. However, it bankrupted in May of last year after spending over $400 million.

“In Nemaska Lithium Inc.’s failure to launch a lithium mine in Quebec, analysts see some of Canada’s disadvantages in the global lithium market coming to bear. The company headed into creditor protection in late 2019 after spending about C$411.4 million on the C$1.27 billion Whabouchi lithium project as of Dec. 31, 2019.

“Remote project locations lacking infrastructure and proximity to end markets, in particular China, along with weak lithium prices remain obstacles for the budding sector in Quebec and other parts of North America, according to analysts.”

When they said “remote project locations,” what they really mean is “middle of nowhere.” People who haven’t spent any time in Canada’s north really don’t get how much nowhere we have. It’s about 800 km north of Montreal and 200 km east of the nearest water, James Bay. That location has a road of sorts, an airstrip hacked out of muskeg and scrub pines, and flying in would be a messy affair regardless given hostile weather. There’s no easy way to get a million tons of lithium to anywhere from there, as special rail infrastructure across some deeply hostile territory would probably have to be built to James Bay, and then ships couldn’t use it for six months of the year. It’s more Siberian than anything, but without a railway through it.

The failure of the Quebec mine means that the lithium locked in the Shield will likely stay there for decades to come. But that’s not the extent of Canada’s reserves. I was speaking with Alex Grant of Jade Cove Partners, a global lithium extraction expert, recently about Alberta’s resources. A lot of lithium exists in brine reservoirs underground in oil and gas regions, and Alberta has its share.

That’s known as unconventional extraction, in that it isn’t brine flats that do the evaporation for you or hard rock mining, and requires some moderately sophisticated processing equipment, but it’s very doable. Grant pointed me at E3 Metals, which is proposing a pilot project in Leduc, Alberta.

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It’s a bit of an uphill battle in Alberta, of course, because its first three answers to any questions are oil and gas, oil and gas, then oil and gas, so lithium extraction, while highly aligned as deep subterranean fluids mining in the energy sector, makes a lot of Albertans scratch their heads.

And lithium has massive reserves globally that are easier to get to. Lithium is a relatively cheap commodity. It’s running $8,000 – $15,000 per ton, but gold is running $46 million per ton and platinum is around $41 million per ton. It makes sense to mine for precious metals in the middle of nowhere, but cheaper commodities when you have to ship tons of finished product require good infrastructure, preferably close to water that isn’t impassable most of the time.

Alberta’s resources are pretty good. It has existing rail infrastructure, trucking experience and pipeline experience, as well as lots of people looking for work. If it wasn’t stuck on oil and gas, it’d be doing a lot more lithium brine and geothermal. Lithium is a lot higher priced as a commodity, as Alberta’s crude is around $340 per ton and lithium is 30 to 40 times that. They are a long way from water still, the same problem that beleaguers its crude, but at better prices per ton it should be viable.

But that’s true of brine deposits in oil and gas regions everywhere in the world, and as with the disparate cost structure that Alberta’s middle-of-continents vs competitors edge-of-water conditions show, the demand and price have to be very high to make Alberta’s products competitive. Expect more brine extraction in the Permian Basin, where they are exploring just separating lithium out of waste water from oil and gas extraction.

There’s a lot of lithium in the world. There’s no particular worries about running short, and many innovators such as E3 are working to make places where it isn’t dirt cheap and easy at least competitive. Canada’s oil and gas region might have a secondary product as demand for its primary output dries up.