Quebec lithium producer, Ford Motor in supply deal for EVs

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A top executive from Quebec-based Nemaska Lithium Inc. has described its agreement to supply Ford Motor Corp. with lithium as a “vote of confidence” for a mining operation that had previously failed to come to fruition.

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Nemaska will be supplying Ford with 13,000 tons of lithium hydroxide annually for 11 years from 2026 onwards, which is when it aims to start producing lithium from its Whabouchi mine in northern Quebec and its conversion facility being built in Bécancour, Que.

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“This is an incredible deal for us,” Steve Gartner, Nemaska’s chief financial officer, said. “Not only does it provide security and comfort for the project going forward, but this is an incredible testament to the work that’s been done and the confidence that an outside player as large as Ford, a leader in the industry, has. This shows to what degree the project is solid.”

Lithium is used to make batteries, including those that power electric vehicles, which have been in high demand in recent years as the world looks for ways to lessen its dependence on fossil fuels.

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Nemaska is currently owned by the Quebec government’s economic development agency, Investissement Québec, and Livent Corp., a Philadelphia-based lithium company.

In 2019, Nemaska was publicly listed, and had different owners and management. A fall in the price of lithium, due to new supply in the market back then, meant the previous team couldn’t finance the project. The company was forced to file for creditor protection in December 2019 and it was eventually sold in 2020.

Today, analysts expect the demand for lithium to continue growing in the coming years. Gartner said his team had reviewed the project and made changes which have “de-risked and maximized the chances of success.”

For example, the location of the conversion facility was changed to a site that provides access to a deep-sea port and other infrastructure that could help it expand in the future.

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Gartner said key aspects of the operation will depend upon hydroelectricity, which will help lessen greenhouse gas emission by 70 per cent and water consumption by 12 times compared to other lithium mining companies.

The current geopolitical environment, in which the United States and Canada are looking to redesign supply chains towards friendlier nations and away from China, which dominates the building of electric vehicles and processing of minerals, also works as a positive for Nemaska.

Gartner indicated that the U.S. Inflation Reduction Act (IRA), which was passed in August, played a role in Ford’s decision to sign with Nemaska. Incentives through the IRA include a US$7,500 subsidy on electric vehicles, available only to companies that build in North America or source inputs from countries that have free-trade agreements with the U.S.

He also said Nemaska was in talks with more companies.

“Those conversations are ongoing, hopefully we will have news in the coming months to share,” he said.

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