Mining in the Northwest: How Northern Ontario’s First Lithium Mining and Refinery Project Could Come Together

Avalon Advanced Materials kicks off with eye-catching collaboration deals, accelerating government approvals to fuel the electric vehicle industry

Zeeshan Syed claims that Avalon Advanced Materials is aiming to create a “catalytic event” in selecting a site in Thunder Bay to place Ontario’s first proposed lithium processing refinery.

After years of much talk and little action, the junior Toronto miner took a big leap forward in June announcing that a former forest products processing plant in the city’s north is the site for a lithium hydroxide conversion plant.

Avalon also introduced a joint venture partnership with Antwerp-based Sibelco, a $63 million deal to bring Separation Rapids, its Kenora-area lithium deposit, into production in late 2025, early 2026.

Production at the Thunder Bay refinery is expected to start in the fourth quarter of 2027, after a two-year run of engineering, procurement, construction and commissioning.

It offers the promise of a combined 500 jobs in Kenora and Thunder Bay.

Now the company is looking for a second development partner to realize the Thunder Bay lithium plant. Discussions are ongoing.

Avalon experienced a changing of the guard last spring with the retirement of former president-CEO Don Bubar and the arrival of Zeehad Syed and a new management team.

Bubar, a geologist, has built a 40-year career in junior mining on the project development side, working on the Separation Rapids lithium project, outside of Kenora, first discovered in 1996.

Syed brings some executive finesse to policy and communications. He worked in the energy sector with the Alberta government and spent some time in the Prime Minister’s Office in the early 2000s.

In an interview, Syed said Avalon’s message to the market is a “crystal, clear focus” on accelerating lithium production in Northwestern Ontario.

Separation Rapids, 70 kilometers north of Kenora, has an established lithium deposit of 8.4 million tons with open-pit mining potential and a 20-year lifespan based on 2018 figures.

Results from a recent drilling program have increased the size of the deposit, Syed said. A new mineral estimate will be out soon.

Near Pickle Lake, waiting in the wings is Avalon’s Lilypad Project, a lithium, cesium and tantalum property that Avalon believes has a significant advantage.

To help bring them into production, Avalon chose Sibelco as its mining partner. The Belgian company brings more than a century of experience in mining and various other industries in 30 countries. They will bring to the table some innovative and cutting-edge technology and support a sustainability story that Avalon aims to promote, Syed said.

“These guys are not amateurs, they are not new to this game. They’ve been in mining operations all over the world.

Avalon wants to serve two markets.

Separation Rapids is a rare pegmatite deposit enriched in the lithium minerals of petalite and lepidolite. Petalite is a type of lithium that is in high demand by the high-strength glass and specialty ceramics companies.

The concentrate processed at the mining site can be sold directly to these customers without any chemical upgrade in a refinery. It provides some early stage cash flow. But Avalon also wants to cater to North American electric vehicle manufacturers.

It is thought throughout the industry that spodumene is the preferred form of lithium rock for making lithium-ion batteries.

Syed replies that petalite “absolutely” converts to lithium hydroxide, and they want to defend that argument.

Petalite isn’t common, it’s rare, he said. “Beyond the control of Zimbabwe and China, Avalon has the only known resource in the Western world.”

Spodumene has been praised for its higher recovery rates on the processing side, but Syed said many of the companies he speaks to are interested in replacement strategies.

It appears that the production timelines to bring spodumene into the supply chain are too ambitious and companies are looking downstream for options and alternatives. That’s where Avalon comes into the picture.

Northwestern Ontario is a rapidly emerging hotbed for lithium exploration. There is an ongoing strike and land acquisition frenzy by a number of aspiring junior players.

But lithium junior miners operate in a different space than exploration companies for precious and base metals.

Since no lithium refineries exist in Canada — to convert lithium oxide into an upgraded battery-grade material called lithium hydroxide — it’s up to companies like Avalon to bridge that gap and become mid-stream processors.

Just as his predecessor Don Bubar promoted three years ago, Syed said the Thunder Bay Refinery can serve as a regional processing hub, processing not only their own feed, but also material sourced from other upstart producers in the Northwest. It helps everyone to build a better economic business for everyone.

“The whole thesis from the beginning is that this has to be a regional facility to help catalyze the entire industry,” said Syed. “There are many upstream producers who are trying to get online but are having trouble raising money or answering the question of where to send their material for processing.

“That’s part of the mission we have, to strengthen and build the supply chain overall and help aspiring new producers get online.”

The Thunder Bay site is ideal, Syed said.

The former Smurfit-Stone property comes with all the necessary infrastructure they could want, Syed said, through road, rail and marine access and power connections.

“There is nothing that is necessary.” he said. “It’s everything you dream of.”

Bubar has suggested in the past that the refinery could be built on a modular basis, with production capacity scaled up as market demand allows.

Syed said that is still being considered.

Avalon hasn’t started filling its order book yet, but North American demand for battery-grade lithium is “clearly there” and Syed said their property in Thunder Bay offers a “very powerful” value proposition.

“We have a vision to build more than one processing facility and that land can clearly accommodate that.”

There is basic engineering, site preparation and a feasibility study to do, but in terms of production capacity and price tag, Syed said they envision a 22,000 ton per year lithium hydroxide processing plant with a price tag of about $525 million.

Environmentally, Strathcona Avenue has had a relatively clean bill of health since Smurfit-Stone closed shop in 2003.

Ministry of Environment, Conservation and Parks spokesperson Lisa Brygidyr said: “There are currently no outstanding environmental orders associated with the site,” but existing compliance approvals remain for industrial wastewater, stormwater and for a closed waste disposal site. These approvals are accompanied by monitoring and reporting obligations by the new owners.

The ministry will notify the new owner of those obligations when contacted, she said.

To bring it all together, Avalon is looking for a joint venture with someone.

No date on when that would happen, but Syed said there are “quite a few parties” willing to collaborate on the lithium processing side.

For the conversion technology, Syed said they are working with two European partners on that front and are currently piloting.

“It’s all about creating very new IP (innovative process technology application) and reducing that carbon footprint.”

As difficult as the government’s licensing regime is for the province’s first lithium refinery, Syed said those talks are underway and he is getting “hopeful signals” from Ontario Mines Minister George Pirie, Economic Development Minister Vic Fedeli and the Prime Minister Doug Ford’s office.

“They understand there needs to be a robust, very modern regulatory system governing this new crop industry and when it comes to midstream processing facilities, it’s a catalyzing event.”

Syed praises the province for doing a “great job” of attracting and investing in the automakers to set up battery technology stores in southwestern Ontario. Now the focus must be on the upstream side, on the mines in Northern Ontario to carry lithium south.

“I’m sure they’ll see the value of getting this online as soon as possible.

Secretary Fedeli has made a series of standard speeches in recent months about Northern Ontario being the “sleeping story” in the electric vehicle supply chain with the possibility of two or three lithium processors in the Northwest.

Syed counts on their support.

“They fully understand that the midstream (processing) aspect of the supply chain is the most CAPEX (capital expenditure) and the government needs to sit at the table.”

The refinery has the potential to become a training facility. Syed said they have reached out to Confederation College and Lakehead University, and economic development teams in Kenora and Thunder Bay about student and youth employment programs.

“This is an industry that’s still in its infancy, so it’s all about the young people and making sure we’re educating young people and creating that value here at home.”

Syed listed First Nations area remain important rights holders and stakeholders that need to be considered.

“We have always believed that they need more than a significant role in this. If we can help support an entrepreneurial role in this, we will certainly look into that.”

Syed said he looks forward to meeting the new Fort William First Nation Michele Solomon, the council and the community.

“We have a lot of ideas and we’re open to all kinds of collaboration opportunities.”

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