Counter-cyclical power play: Lithium Universe (ASX:LU7) sets Québec on the global lithium map
September 30, 2024Lithium Universe (ASX:LU7) is setting its sights on becoming a key player in the global lithium supply chain, with the recently completed Preliminary Feasibility Study (PFS) confirming the viability of its Bécancour Lithium Carbonate Refinery in Québec.
This refinery is poised to produce 18,270 tonnes per annum of battery-grade lithium carbonate, using proven technology from Jiangsu.
Notably, this project remains economically viable even in today’s depressed lithium market, showcasing the company’s counter-cyclical strategy to develop during downturns and be ready for market recovery.
“The successful completion of our Preliminary Feasibility Study is a significant milestone for the company, especially given that we only launched in August of last year,” said Iggy Tan, Chairman of Lithium Universe. “Our counter-cyclical strategy is centred on advancing projects during market downturns, allowing us to strategically position ourselves for growth as the market rebounds”
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A robust financial model underpins the project. With a pre-tax Net Present Value (NPV) of US$779 million and an Internal Rate of Return (IRR) of 23.5%, the project offers a swift payback period of 3.5 years
Operating costs are expected to hover around US$3,976 per tonne, a figure bolstered by Québec’s abundant supply of green, affordable hydroelectric power.
The project is designed to address a critical gap in the North American lithium conversion market, where over 90% of LFP battery manufacturing is currently concentrated in China
With an increasing shift towards onshoring supply chains, particularly under the US Inflation Reduction Act, Québec’s strategic location and low-cost energy present a compelling alternative to Chinese conversion facilities.
The Bécancour Refinery also benefits from environmentally friendly operations, boasting a 95% reduction in greenhouse gas emissions due to Hydro-Québec’s clean energy
By leveraging the success of the Jiangsu Refinery, which set new industry standards, Lithium Universe’s approach combines sound economics with technological innovation, positioning the Bécancour Refinery as both reliable and scalable in a market that increasingly prioritises sustainability.
“We are confident that the Bécancour lithium refinery will emerge as a leader in producing green, battery-grade lithium carbonate,” Tan added
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In an industry fraught with challenges, including numerous failed lithium conversion projects, LU7’s proven technology and strategic location give it a critical edge.
As Tan highlighted, “We will be looking to secure strategic partners at the project level to help fund the project. Discussions are already underway with OEMs keen to secure spodumene conversion outside China”
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With rising demand for electric vehicles and energy storage systems, the Bécancour project offers a timely solution to the lithium conversion bottleneck, all while positioning Québec as a trans-Atlantic hub for lithium refining.
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