Lithium Universe in spodumene supply discussions for Bécancour refinery

Lithium Universe is pursuing a non-binding MoU to cover full annual SC6 spodumene supply of 140,000 tonnes for its Bécancour lithium refinery in Canada.

Lithium Universe is targeting a spodumene feed supply for at least 10 years to begin around 2028. Pic: Getty Images

• Lithium Universe is looking to lock in a spodumene supply deal for its Bécancour refinery in Québec

• Discussions are underway with multiple spodumene concentrate producers, both operational and near-term developers

• LU7 intends to purchase spodumene ore at benchmark prices from the market

 

Special report: Lithium Universe is in discussions with several spodumene suppliers to lock in long-term feedstock agreements for its Bécancour lithium refinery in Québec.

To feed its planned 18,270t lithium conversion facility, Lithium Universe (ASX:LU7) is negotiating a non-binding MoU for the supply of 140,000t per annum of SC6 grade spodumene material.

The company is targeting a spodumene feed supply for at least 10 years and rolling for five years to give security of supply for project financing.

LU7 forecasts initial supply of 56,000t in 2028, increasing to 98,000t in 2029 and achieving full 140,000t capacity per annum from 2030.

While North Atlantic spodumene supply remains an option, LU7 sees a strategic advantage in securing Canadian feedstock to minimise shipping risks and reliance on foreign processing.

The spodumene concentrate would be refined into ~18,270t per annum of battery grade lithium carbonate, supporting the expansion of Canada’s electric vehicle and energy storage industries.

LU7 plans to acquire spodumene ore at market benchmark prices, retaining full ownership of the resulting lithium carbonate, which it may sell on the open market or directly to an OEM offtaker.

The supply agreement may transition to a definitive agreement when the refinery becomes funded and construction begins.

Refinery to generate $383m annual revenue

Following the release of a pre-feasibility study in October last year, a February 2025  definitive feasibility study for the Bécancour lithium carbonate refinery reflects a cautious forecast of US$1,170 per tonne (A$1,840) for spodumene concentrate and $20,970/t for battery-grade lithium carbonate equivalent.

At full production capacity, the project is expected to generate $383m in annual revenue with costs totalling ~$236m leading to an annual EBITDA of ~$148m and a gross margin of 39%.

The capital cost for the project is estimated at $549m and has risen by 11% driven by the inclusion of a zero liquid discharge system to enable the recycling and reuse of all process water on site.

A full-rate payback period of 3.9 years has also been estimated along with a post-tax NPV at an 8% discount of US$449m (AUD$706.9m), IRR of 21% and expected revenue of $383m.

More from Lithium Universe: Collaborating on conversion capacity

Focus will shift to locking in OEM once feedstock secured

LU7 executive chairman Iggy Tan said there were several interested potential spodumene suppliers that could meet the 2028 timeline with discussions ongoing.

“There is real interest in the market,” he said.

“The company will continue to keep the market informed concerning progress of these discussions and negotiations.

“Once we can secure feedstock supply for the refinery, the focus will shift to getting a strategic OEM on board the project in exchange for the valuable battery-grade lithium carbonate offtake”.

Suppliers favour local lithium conversion

LU7 said the interested parties recognised a real benefit in potentially supplying their spodumene product to a local lithium converter, as opposed to shipping and selling their spodumene to Chinese operations for conversion.

The spodumene transport costs could be as high as US$100 per dmt, which represents US$800-900 per tonne of finished lithium carbonate product.

If the final lithium carbonate must be shipped back to North America that adds another ~US$200 per tonne of final product.

Today, Canada has an import tariff of 25% on all Chinese lithium chemicals so the local conversion is an overriding advantage.

This article was developed in collaboration with Lithium Universe, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

Originally published as Lithium Universe in spodumene supply discussions for Bécancour refinery