The federal and provincial governments are prepared to financially backstop Frontier Lithium’s proposed refinery in Thunder Bay.
The Sudbury company said March 4 that it’s pocketed letters of intent (LOI) from the two orders of government to help fund construction at the former site of the Thunder Bay generating station.
The refinery is part of Frontier's integrated plan to mine and ship lithium from its PAK Project, located in a remote area north of Red Lake, to Thunder Bay for processing.
Frontier stresses these LOIs are non-binding and represent only an “initial step in ongoing discussions with the respective government agencies.” The parties are working toward completing a final term sheet.
The price tag to build the refinery was $670 million (US$462 million) in a 2023 study.
Company spokesperson Bora Ugurgel said he couldn't comment on what government is prepared to contribute nor on the funding split between government and industry until those term sheets are signed.
Plant financing from the corporate side will come from Frontier, Mitsubishi Corp. (Frontier’s 25 per cent joint venture partner) and off-take agreements from customers.
Refinery construction is expected to start in 2028 with first production achieved in 2030.
The project timelines to build an open-pit mine at PAK will be revealed in an upcoming feasibility study around May.
In a statement, Frontier president-CEO Trevor Walker called the LOI news a significant milestone for the company.
“We are pleased to see support for upstream critical minerals processing comparable to the commitments provided to the downstream manufacturing sector in Ontario,” said Walker.
"We appreciate the support from the federal and provincial governments and look forward to continuing to collaborate as we mobilize Canada's critical mineral advantage — starting in Northern Ontario."
PAK is an advanced stage of exploration project that contains two high-grade spodumene-bearing lithium deposits, said to be the largest resource in Ontario. The plan is to ship spodumene concentrate to Thunder Bay where the company's refinery would convert it into 20,000 tonnes of lithium salts annually, enough to power 500,000 electric vehicles a year, the company said.
Since PAK is located in an isolated area, an access road and bridge still need to be built to move concentrate out. Both the federal and provincial governments are funding that infrastructure. That work is expected to start this year.
Frontier said the design of its Thunder Bay refinery would offer enough manufacturing capacity to process its own material and feed from other mines in Canada and even internationally.
Unlike gold mining, lithium needs to be upgraded into a product that can be used by electric vehicle battery manufacturers.
Since there are no lithium refineries in Canada, Frontier and its mining contemporaries in the northwest are each proposing processing plants.
Due to its rail connections and port facilities, Thunder Bay could host as many as three plants, which would reinvent the city’s image as a lithium-processing hub for the North American auto sector.
The abundance of lithium resources has made this region a globally strategic source of high-tech, battery and critical minerals.
Last December, Export Development Canada delivered a $100-million letter of intent to another regional lithium player, Green Technology Metals, for its Seymour lithium project, near Armstrong.
But until this week, Ontario has been slow off the mark in showing its support to create new refining capacity.
With U.S. trade war talk hanging over PDAC mining week in Toronto, Premier Doug Ford revealed his government is establishing a $500-million Critical Minerals Processing Fund. Details on that initiative have yet to emerge.
That move was given a thumbs up by Frontier.
“We believe we are the perfect investment to co-benefit from his commitment to invest in ‘strategically located’ facilities to develop the province’s vast resources of lithium other key minerals and metals,” said Ugurgel.
When asked if a tariff wall might stymie American investment in Frontier and alter their development plans, Ugurgel responded that events still remain fluid to determine that.
Ugurgel said they prefer to take the long-term view and remain optimistic about the future.
“The demand for lithium continues to grow, driven by the global shift towards renewable energy and electric mobility. We will be well positioned to meet this demand, and we are committed to adapting to evolving market conditions as we advance our project toward production and processing."
On the trade dispute, the reaction from Ottawa, Queen's Park and other provincial governments to fast-track strategic resource development is music to their ears.
"This is a watershed moment for our industry and for Canada’s economic security. We hope these words, intent and funding commitments become a reality, and soon. The urgency is something we at Frontier Lithium have long recognized.”
