This article is a sponsored feature from Mining.com.au partner Avalon Advanced Materials. It is not financial advice. Talk to a registered financial expert before making investment decisions.
Avalon Advanced Materials (TSX:AVL) is positioning itself to become North America’s, if not the Western Hemisphere’s, largest lithium hydroxide refinery, with first-stage production of 30,000 tonnes per year.
In the global race to produce high-quality lithium, Avalon appears to be leaving its rivals in its wake, unveiling plans to address a global shortfall predicted to occur around 2029.
The Toronto-based company boasts two flagship projects: the Nechalacho Rare Earth Elements (REE) and Zirconium Project in Canada’s Northwest Territories, which hosts substantial deposits of REE and zirconium vital to nuclear, defence, and communications; and Lake Superior Lithium (LSLi), which is poised to develop a lithium hydroxide processing facility.
LSLi, located in Thunder Bay, has completed a preliminary economic assessment (PEA) and offers “strategic access to North American transportation networks, skilled labour, and established industrial infrastructure”.
It aims to be a midstream lithium hydroxide processing facility, connecting northern Ontario’s lithium resources with the electric vehicle (EV) battery manufacturing ecosystem in southern Ontario and North America.
“Situated on fully zoned, serviced industrial land, LSLi benefits from existing infrastructure that reduces development costs and timelines,” Avalon states.
“Its proximity to rail and a deep-water port enables efficient access to both domestic and international markets.”
The global lithium sprint
Avalon Vice President of Corporate Development Christopher Senyk says when it comes to competitors, there are around 12–15 spodumene projects on the books across Ontario and Québec.
“None of them really have a refining game plan or are looking to do a fully integrated capex. Those projects are 10 years — if not longer — away, if they ever happen,” Senyk says.
“We are positioned to be the first entrant into the market with battery-grade lithium hydroxide that the Western market needs in terms of refining.
“I would say we’ll be a Western world and definitely North American leader in lithium hydroxide. Let’s put it this way: at 30,000 tonnes, LSLi would be the largest refinery in the Western Hemisphere.
“There’s currently no real lithium hydroxide refinery in Europe. There are two established lithium refineries in North Carolina, with capacities of 15,000 and 5,000 tonnes, respectively.”
Avalon CEO and President Scott Monteith is equally optimistic, saying “this is just the first phase”.
“When we build the other two or three phases, we are going to double or triple the output of lithium hydroxide,” Monteith says.
“Our focus is the midstream process — the refining. Period. This is very doable with the right people on the team and the right capitalisation.”
From junior miner to world-class refinery operator
Monteith, who joined the company in 2023, says Avalon was a junior miner for most of its 30-year history.
“There came a point about three years ago when the board realised we were running out of time, so we needed to change our strategy,” Monteith says.
“This upcoming fiscal period is when we will have the table set for the new corporate strategy. We changed the company from being a junior miner to a resource collector with a bunch of geologists running it, and now to being an operator.
“Avalon is a holding company, and instead of having five or six resources scattered around the company, we are the holder of two subsidiaries.
“When I joined the company, it was on the verge of bankruptcy. We sold off a few non-core assets, which bought us a ninth life.”
Finnish interest
In mid-July, Avalon announced it had received a non-binding letter of interest from Finnvera, Finland’s official export credit agency, for potential financing of Metso equipment and services for Thunder Bay.
The letter followed an application by Metso relating to an anticipated commercial contract valued at approximately €100 million ($162.9 million).
Senyk, who joined Avalon in May this year, says the company has aligned with Metso due to its eco-friendly credentials.
He predicts six to 12 months from Feasibility Study completion to final investment decision (FID), which is expected towards the end of 2027, with the second half of 2029 targeted as the “ramp-up start date”.
“That’s a pretty steady timeline. We are not building a mine. We’ve got an established 400-acre (161-hectare) facility on Lake Superior, with infrastructure already in place. We feel we are ahead of the game in terms of what we bring to the table,” Senyk says.
“Look at the geopolitical winds out there. Everyone is trying to onshore everything and get away from China, for example.
“The time is right for customers that are looking to pull away with 95% of lithium refining done in China and rare earths is probably 80–85%.
“The moment is here. We want to capitalise on it and set ourselves up for success over the next 20-plus years.”
Location, location
Monteith describes the Lake Superior Lithium asset as a “very important property.”
“If we’d bought a greenfield site, it would take us 10 years because you’d never get permitting for a deep-water dock. We can load and unload cargo ships on our property,” he says.
“LSLi has three rail links, it’s on the Trans-Canada Highway, and it’s inside the city, so we’ve got labour and housing all around us.
“We’ve had federal ministers in Canada call it a national asset.”
Avalon forecasts 14–30% growth in lithium demand during 2026, with more than 80% driven by EVs and batteries. Battery applications are expected to represent the lion’s share of total lithium demand by 2040 at 96%.
Importantly, while many are looking to the cheaper lithium carbonate, lithium hydroxide is renowned for its superior qualities.
Rare earth security
At the same time, Avalon describes the Nechalacho Project as a “secure stockpile in an allied jurisdiction”. The project is located at Thor Lake in Canada’s Northwest Territories and hosts neodymium, praseodymium, dysprosium, terbium, and gadolinium, along with yttrium, zirconium, tantalum, and niobium.
“Rare earth supply chains remain among the most geographically constrained in the world,” Avalon states.
“The vast majority of global processing and magnet production is concentrated in China, creating a significant geopolitical and economic risk for North American industries that depend on these materials.
“Nechalacho combines scale, high-value rare earth enrichment, and a cleaner development path to restoring North American rare earth independence.”
Senyk says the results of a PEA on Nechalacho are expected in October this year.
Avalon spent C$100 million ($102 million) on a Feasibility Study of the site in 2013.
“The Feasibility Study is going to be a refresh. We don’t have to drill another 106km of drill holes like we did in 2013, as the mineralogy doesn’t change,” Senyk says.
“Feasibility should be targeted towards the end of 2027 with an FID due in the late 2027–28 period.”
The next step: Nasdaq
Monteith says Avalon doesn’t foresee any major challenges to either project timeline in the near future. The company is also planning to list on the US stock exchange in the Canadian autumn.
“There are no showstoppers in sight right now. Geopolitics are supporting ventures like Avalon,” Monteith says.
“The need for the West to move away from China is so massive that a lot of people are paying attention to this.
“The biggest hill to climb here is raising the capital. It’s our goal to list on the Nasdaq this fall, which will give us access to a much bigger pool of capital and put us in the same ocean tide that our peers are swimming in.”
Monteith believes there is a “window of opportunity between 2029 and 2033”.
“If you’ve got material, you are in a good position from a price and commercial sales point,” he says.
“We want to bridge the gap between our market cap today, which is under C$50 million, and our asset value, which is around C$4 billion.
“I think there’s a real opportunity to get there. It’s a great story. It’s a country builder.”
A top team
Senyk credits much of Avalon’s current success to a new management team that has come on board in the past nine to 10 months.
“We’ve got a CFO who comes from almost a decade at Albemarle [NYSE:ALB] (a global lithium corporation), then there’s myself, two project directors for our respective projects, and a new person in government relations who used to work for the Government of Canada,” Senyk says.
“Monteith has bolstered the team with experienced people who have done scale-ups and big things with big miners.”
“We are moving in the right direction with how the team is built. You are going to see a lot of good things out of us over the next six to 12 months.”
Write to Christine Retschlag at Mining.com.au
Images: Avalon Advanced Materials
