Avalon to Play Key Role in Lithium Battery Materials Supply Chain Development
Don Bubar is the seasoned CEO of Avalon Advanced Materials (TSX: AVL), a Canadian mineral development company. As consumers switch to electric vehicles, he sees a growing demand for lithium, and that’s making Avalon’s Separation Rapids project in northwestern Ontario a key part of an important supply chain.
He has also proven to be a geologist with terrific foresight. “I had an opportunity to acquire the Separation Rapids Lithium Project in 1997 and thought then that it might be a resource that had considerable future potential.”
Today, the project is starting to realize that potential. In addition to the battery materials that most people associate with lithium, the Separation Rapids project will also be a source of the rare high purity lithium aluminum silicate mineral petalite, which is a critical ingredient used in the manufacturing of high strength glass and glass ceramic products. This provides Avalon the potential to serve multiple markets.
“The mineral for the glass ceramics application gives us an opportunity to start with that as an initial product until we get the capability to process lithium mineral concentrates to produce lithium derivative products for battery applications.”
Adding that processing capability has become a central focus for Bubar. “I’m well aware that there's no shortage of lithium resources. They occur throughout the Canadian Shield and there's lots in northern Ontario. So, it's always been a case of having a facility that can process concentrates. Once that gets established, we can serve not only our needs, but the needs of other aspiring new producers in the province as well.”
In an effort to develop a refinery and establish a regional lithium battery materials supply chain to serve the needs of future electric vehicle and battery manufacturers, Avalon recently announced a partnership agreement with Essar Group, a large Indian company, to co-develop Ontario's first regional lithium battery materials facility. According to Bubar, it’s a project that is generating a lot of attention. “In addition to Essar, there’s lots of interest from other potential investing partners. The federal and provincial governments have indicated an interest in supporting the initiative to attract EV and battery manufacturers to come and set up in Ontario. It’s all part of a plan to help deliver on a key priority of the Ontario government’s Critical Minerals Strategy, designed to connect industries, resources and labour by growing domestic processing capacity and creating resilient local supply chains.”
The plan is to establish the refinery in Thunder Bay to take advantage of its central location and excellent transportation infrastructure. While there is work to do to finalize the project, including a feasibility study, the hope is to start construction in the coming months with a 2025-6 target date for completion.
The real challenge might be in deciding how big the refinery should be. “The market's going to continue to grow” Bubar said. “So you have to look at this as a growth business and create opportunities for further expansion of production capacity down the road. Ultimately, this should prove to shareholders that we've got a clear path forward to becoming a much bigger, more profitable business.”
While a refinery promises to put Avalon in the middle of an industry that has a lot to look forward to, much of the company’s success to date has been based on a long history of applying ESG principles – because sustainability is in Bubar’s DNA. “If you're going to produce materials for clean technology, you need to be able to show the end users that you're producing them in sustainable, low impact ways. We started to adopt ESG principles over ten years ago. We recognized then that they were important, and we still consider them essential in how you design a new operation to produce critical minerals like lithium for clean technologies.”
Bubar also sees this as another way to grow the business. “Closed mine sites provide opportunities to extract value from the waste they leave behind. There are so many examples of historic mine sites that were mined for one traditional commodity where the rock had lots of other minerals in it that had no value then but do today. So, often waste piles and tailings ponds can be full of value. You can go back to those sites, extract the minerals, and remediate the long-term environmental liability while you do it.”
As Bubar knows, what’s good for the environment, is often good for business. “That's one of the reasons I'm not worried about accessing capital, because our business now is one that the ESG investment community is very keen to support.”
If all of the Company’s plans come to fruition, Avalon should be a key link in the Canadian lithium supply chain and remain in the good graces of ESG investors for years to come.
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