Canada-based metals company Avalon Advanced Materials has signed a binding letter of intent with RenJoules International, part of the Essar Company, to build a lithium refinery in Thunder Bay, Ontario, and establish a regional lithium battery materials supply chain to serve electric vehicle battery manufacturers.

The lithium refinery will be designed to accept lithium minerals concentrates from Avalon's Separation Rapids Lithium and new producers from the many lithium pegmatite resources in northwestern Ontario.

The current demand for lithium battery materials supports an initial production capacity of 20,000 tonnes per annum of lithium hydroxide and lithium carbonate refinery.

Construction of the new refinery is expected to begin later in 2022, and it is expected to be complete by 2025.

Kush Singh, chief executive officer of Essar Power, said the new refinery would be a core part of the company's global strategy of investments in the energy transition towards decarbonisation.

"Lithium is a foundational critical mineral for the battery supply chain and with the Ontario government's stellar vision through its Critical Mineral Strategy, we are confident that this is the right location and time for our strategic partnership with Avalon and other stakeholders," Singh said.

Avalon's president Don Bubar commented, "While EV manufacturing and lithium battery materials production can be the initial catalyst for starting critical minerals supply chains in the North, it is just the beginning where the innovation of new products and new efficient processing technologies for other critical minerals such as tantalum, cesium, and rare earths, can inspire future growth into other areas of advanced manufacturing including aerospace technology."

In April 2021, Avalon signed a provisional agreement with indigenous business group Fort William First Nation (FWFN) that a lithium battery materials refinery can be built on FWFN's land Thunder Bay, Ontario.