From Bottleneck to Boom: Why Canada Needs Localized Lithium Refining
Find out why Canada needs localized lithium refining and how it will benefit the country and its future energy plans.
Author: Jose Francisco Velasco Davis
Lithium is one of the most important materials in the green energy revolution. Its use in batteries made electric vehicles (EVs) and energy storage a reality. Despite being such an important material, the majority of lithium is refined in just a few countries. This centralization of refining is causing a bottleneck in the supply chain–holding back up to 350 million electric vehicles by 2040 and stifling much-needed battery tech innovation.
As Canada looks to establish itself as a leader in the green energy transition, it is more important than ever that we develop a strong domestic lithium refining industry. Localized lithium refining creates jobs, spurs economic growth, and ensures a secure supply of this vital material well into the future.
The key to unlocking this potential lies in developing our domestic lithium resources. Canada has an abundance of hard rock spodumene and brine-based lithium resources. With the right policy and investment strategy, we have the potential to become a leading global supplier of this critical metal.
China’s Lithium Dominance
While China only produces around 13% of the world’s lithium, it is responsible for refining nearly 60% of the global supply. This dominance has allowed them to exert significant control over pricing and availability, often putting other countries at a disadvantage. In 2015, China started subsidizing their own domestic battery producers, making it effectively impossible for foreign companies to compete. This “White List” only included Chinese cell manufacturers, which forced out South Korean and Japanese companies that had factories in China. Although the White List was canceled in 2019, its effects are still being felt today. China now has a monopoly on lithium production and dictates the terms of the market.
Leaving lithium refining in China also poses a grave environmental threat. The process of extracting and refining lithium is energy-intensive and can have a significant impact on local ecosystems. In China, much of the lithium mining is taking place in the Tibetan Plateau, one of the most fragile and ecologically sensitive regions on Earth.
If Canada wants to be a leader in the green energy transition, it needs to do more than just produce lithium. We need to develop a sustainable and responsible approach to lithium mining and refining that accounts for the environmental and social impacts of this important resource.
The State of Lithium Production in Canada
There are currently an estimated 2.9 million tonnes of lithium resources in Canada. The majority of these resources are located in Quebec, with smaller deposits in Alberta and Saskatchewan. Yet, between 2014 and 2019, Canada produced limited amounts. Canada remains a net importer of lithium, totaling $161 million with no local production at all in 2020.
This is not to say that there aren’t companies working to develop lithium projects in Canada. In 2018, a mine in Quebec began commercial operations, sending spodumene concentrate to Chinese refineries to be used in lithium carbonate. When global spodumene capacity nearly doubled later that year, mainly in Australia, prices of lithium compounds and spodumene concentrate fell abruptly. Unfortunately, the same mine shut down production in 2019 and sought bankruptcy protection. The firm was purchased in 2021 and a $100 million investment into the mine was recently approved. However, the ore extracted will still need to be processed in China–putting Canada at a disadvantage when it comes to the lithium battery value chain.
That said, Canada is well-positioned to become a global leader in lithium refining. We have an abundance of lithium resources, both in terms of quality and quantity. We also have the skilled workforce and the infrastructure needed to support a thriving lithium industry.
Bringing Lithium Refining Home
It’s no secret that Canada is falling behind in developing the infrastructure and capacity to process lithium into a battery-grade material. To catch up, the Canadian government needs to make a significant investment in refining capacity.
Lithium refining companies like Mangrove Lithium are working to change this by bringing lithium refining to the source. By co-locating near the point of lithium extraction, Mangrove can create efficiencies and reduce costs across the battery value chain. By distributing the refinement process, we can also create a more stable and secure supply of lithium and cut carbon emissions used in transcontinental shipping.
Global climate destruction and decreasing consumption are top of mind issues for many voters and consumers. Mangrove’s technology will allow the lithium industry — domestic and global — to cut environmental impact by addressing the full life cycle of lithium-ion batteries.
Learn more about the battery value chain and battery-grade lithium here.