Growing the Battery Materials Supply Chain in Canada

Please introduce yourself and Nouveau Monde Graphite.

Thanks for having me. Nouveau Monde Graphite is developing what will be the largest and most advanced graphite operation in the Western world. Mining the ore and creating the finished battery material are two different projects. Two hours north of Montreal, there will be a big mine and concentrator that is currently under construction, called the Matawinie project. We are planning to start producing 100,000 tonnes of flake concentrate per annum in 2024.

Then comes the project to transform those flakes into battery-grade graphite in Bécancour, which is located between Montreal and Quebec City on a large industrial complex. We are planning to have 60% of our production focused on producing the materials needed by consumers and battery makers.

What is the demand for graphite and how does it differ from other EV battery materials?

As Elon Musk said a few years ago, EV batteries should be called nickel-graphite batteries. There are 1.2 kilograms of graphite per kilowatt-hour (kWh) of battery capacity. There are over 220 battery plants using graphite getting built around the world with over 1 gigawatt-hour (GWh) per plant. All those plants are using graphite on the anode. In terms of the cathode, there is a lot of diversification, including materials such as lithium with either nickel, cobalt, manganese or sometimes lithium-iron-phosphate (LFP), depending on the chemistry. The anode, which is the other essential side of the battery, is all graphite.

Currently, the graphite market consists of 800,000 to 1 million tonnes of flake graphite per year going into different products such as refractory bricks, coils for iPhones and pencil polymers. There is graphite everywhere in our lives but today, the demand for EV batteries is really driving the future of graphite. We will need over five million tonnes more graphite by 2030 just to sustain the 220 plants that are getting built today. That is changing the landscape for graphite, but we should remember that graphite is used in other applications as well.

Why is there such a need for a local and reliable supply chain in North America for graphite? 

Lithium-ion battery making in America is fairly recent. The first company to develop lithium-ion cell making is Tesla and Panasonic in Nevada. Panasonic made its announcement back in 2014 and it does take time to develop a local supply chain. We started to develop our project in 2015 and will be in production in 2024. It takes nine years to develop a battery metal supply chain. We started our own project based on the new market that was getting developed primarily by Tesla. 

Today, 100% of graphite comes from China because that is still where lithium-ion batteries are mostly made.

Today, 100% of graphite comes from China because that is still where lithium-ion batteries are mostly made. We need to slowly but surely develop these capacities here because of all the delays that we see in the market. Currently, to bring a container from China to the US costs about $30,000 for a 40-foot container. You can only fit 20 tonnes of material with $1,500 per ton of our product. The costs are not the only thing that is significant, it is also the delays. There are still delays in the production of cars because manufacturers do not receive the amount of graphite they need, so we need to develop a local supply chain.

In order for consumers to buy cars knowing they are part of the solution and not part of the problem, we will need a local supply chain.

Another very important topic is the issue of producing cleaner graphite. We are all on the same planet and we must develop graphite production more reliably and sustainably. Here in Canada, we have the chance to have standards by using hydroelectricity. We are planning to produce a carbon-neutral product using an all-electric mine. To do all the things right to make sure we minimize our footprint on the planet, we need to control our supply chain from the rock to the finished product. In order for consumers to buy cars knowing they are part of the solution and not part of the problem, we will need a local supply chain. This is a new concept but we should get started now. 

What are the unique selling points of Quebec and Canada’s EV materials supply chain? 

You need a lot of conditions to make the investment right for foreign investors. First of all, in terms of battery metals, Canada has the right geology. In Canada and Quebec specifically, we have graphite, lithium, nickel and a lot of other different battery metals. Quebec has the right geology and expertise to extract battery metals and the right government that is savvy about mining. We also have environmental rules that are clear and businesses here adhere to them. It is really a stable and safe place for foreign investors looking into mining. 

The low energy costs and the green hydroelectricity we have in Quebec are key for investors who require a long-term supply of energy.

The low energy costs and the green hydroelectricity we have in Quebec are key for investors who require a long-term supply of energy. We can offer a stable cost structure, which is super important. The stability of our government is also key, as is a government that supports our initiatives. 

There are also other conditions that were not there before but are now here due to a growing market. We need to understand that local cell production is occurring now in North America, after having been missing for a while.  There are more consumers that want to buy an electric car. Cell makers understand that if they do not produce enough cells in the next two to three years, there will be protests in the streets by consumers. We need to stop waiting for the next technology and just deploy the current one. What people want are cheaper Teslas. 

This presents a great opportunity for us. It is all up to execution now. Quebec is the right location and has the right skill set and infrastructure to execute on the growth of the North American EV materials economy. 

What should be the main elements of a Canadian national strategy for its EV supply chain? 

There are two parts to my answer. First of all, it takes a long time to develop a supply chain for EV materials. A project like ours has been in the works since 2012. We invested over $100 million in de-risking our project. All this takes time and so the government needs to realize that if they want to be helpful, they need to make sure these projects that have been getting developed for a long time and that can position Canada as a leader in certain segments, are brought across the line. Make sure those projects become a success.

The Canadian government needs to invest in all spectrums of the EV materials supply chain, from exploration to transformation.

On the other hand, we need more of those projects to be developed. The Canadian government needs to invest in all spectrums of the EV materials supply chain, from exploration to transformation. They need to offer the right fiscal incentives such as tax benefits for companies that invest in the transformation. We are a mining nation and there are already a lot of fiscal incentives, but there should be more such as flow-through shares (FTS).

In terms of enabling the transformation, we need to invest more. Canada needs to have incentives for miners to convert their materials into battery-grade materials. This process constitutes two-thirds of an entire project’s investment in most cases. The mine itself is worth one-third of the investment but the rest should be dedicated to transformation. The government needs to understand that. One thing that the Quebec government did very well at the highest level is that its ministers visited projects and met with customers across the world. This helped them understand what needs to be done to make the transformation happen. We need to see the same thing at the federal level as well. Government officials need to do their groundwork in order to understand what is needed for the battery materials supply chain and speed up the decision-making process.