Sellout of Canada's Resources to Rio Tinto
Rio Tinto and Quebec Government Join Forces to Supply Critical Minerals for U.S. War Economy
Rio Tinto announced the purchase of U.S.-owned Arcadium Lithium on October 10. It is a world producer of lithium hydroxide and lithium carbonate, "with facilities and projects in Argentina, Australia, Canada, China, Japan, the United Kingdom and the United States." Rio Tinto itself is an Anglo-Australian oligopoly, that also has China as its largest shareholder, along with U.S. hedge funds BlackRock and Vanguard Group as major investors.
With its U.S.$6.7 billion acquisition of Arcadium Lithium, Rio Tinto will have access to lithium mines, processing facilities and deposits in Argentina, Australia, Canada, and the U.S. One of the mines is the Whabouchi deposit located near the Eeyou Istchee (Cree) northern community of Nemaska, Quebec. It is scheduled to start mining lithium in 2025 and to become North America's largest producer of lithium, one of the 35 critical minerals identified by the U.S. government as "strategic" to its "national security." Lithium is used in manufacturing missiles and portable equipment used by soldiers as well as batteries.[1]
Federal subsidies are available and are being used by companies mining critical minerals in the U.S. through the U.S. Inflation Reduction Act, and in Canada, through the Canadian Critical Minerals Infrastructure Fund (CMIF) and the U.S. Defense Production Act (DPA).[2]
By purchasing Arcadium Lithium, Rio Tinto also gets its hands on the Nemaska Lithium chemical conversion facility being built in Bécancour, Quebec, to produce battery-grade lithium hydroxide. The plant is located on a 500,000 square metre plot of land in the industrial park of Bécancour adjacent to the future GM-Posco and Ford-ECOPRO battery component plants being built to produce material for electric vehicle (EV) cathode batteries.
Ford had signed an agreement with Nemaska Lithium to source lithium hydroxide, an essential component of battery cathodes, to be produced at the Bécancour plant.
Map
showing location of GM-POSCO (red), Ford-ECOPRO (blue) and Nemaska
(black) plants in construction in the Bécancour industrial
park.
Canada's Pay-the-Rich Mechanisms Still in Place
The Canadian and Quebec governments have promised oodles of money for the building of these plants. Together, both governments promised more than half of the money needed to build Ford-ECOPRO's Bécancour plant, loans of $644 million for the construction of the $1.2 billion plant. The "forgivable" portion of Quebec's loan amounts to $194 million, the equivalent of a subsidy.[3]
On October 31, Ford announced that it was withdrawing from the cathode factory project in Bécancour. Construction was put on hold at least twice in 2024 because of lower than expected sales of EVs and issues related to the manufacturing technology to be used to produce the material component of battery cathodes. The majority partner in the Bécancour plant project, south Korean ECOPRO, is now looking for a new business partner. The plant is expected to produce its first cathodes in the first half of 2026, reaching a capacity of 45,000 tons of active material per year.
Reasons for Rio Tinto's Purchase of Arcadium Lithium
Rio Tinto Chief Executive Officer Jakob Stausholm said: "Acquiring Arcadium Lithium is a significant step forward in Rio Tinto's long-term strategy, creating a world-class lithium business alongside our leading aluminium and copper operations to supply materials needed for the energy transition."
On Rio Tinto's website, it says that "Rio Tinto and Arcadium have complementary footprints and deep experience in Argentina and Quebec, where Rio Tinto expects to establish world-class lithium hubs with clear opportunities for sharing skillsets and reducing costs."
"The hard rock opportunities in Canada are very attractive to us," Rio Tinto CEO Stausholm said in a conference call with analysts. "For 20 years, Rio Tinto monitored not just the company [Arcadium], but the entire industry, looking for the right time to buy," he said.
What he is referring to is that lithium can be extracted from a mineral called spodumene, a lithium-aluminum silicate that needs to be mined from hardrock such as that found in Quebec and provinces in Canada.
At the same time, it is known that Arcadium has expertise in direct lithium extraction (DLE), a growing segment of the lithium industry that mechanically filters the metal from brines in the form of lithium carbonate. As Reuters reported on October 4, "No company has commercially launched a DLE process without evaporation ponds, but Arcadium has successfully been using DLE since the 1990s with ponds in Argentina and its engineers are widely seen as global experts. Rio paid $825 million in 2022 for a DLE project in Argentina that has yet to produce the metal."
For Rio Tinto it was the right time to buy Arcadium Lithium. The world market price for lithium is at an average of U.S.$15,000 per ton, a huge drop from its historical peak of about U.S.$75,000 per ton in January 2023. Rio Tinto's offer to buy Arcadium Lithium was at a market share price that was 50 per cent lower than it had been at the beginning of the year, before the share price started to plummet.
Evolution of the world price of
lithium carbonate (orange) and lithium hydroxide (yellow), 2019-2024
(source: The Logic)
Notes
1. See "Multi-Million Dollar Partnership Between Hydro-Québec and the U.S. Army", TML Daily, No. 52, December 2, 2022.
2. On May 16, Natural Resources of Canada and the U.S. Department of Defense (DoD) announced they were investing $4.9 million and U.S.$8.4 million respectively in Lomiko Metals to develop a graphite mineral deposit located near Duhamel in Southwestern Quebec, along with similar funding from the same Canadian and U.S. agencies to develop a cobalt-bismuth mine in the Northwest Territories.
On September 26, the DoD announced $18 million in funding for a British Columbia company called Nano One Materials. The company has set up a pilot plant in Candiac, south of Montreal, to produce lithium iron phosphate (LFP), the only plant of its kind in North America. LFP is the active material in the cathodes of rechargeable lithium-iron-phosphate batteries.
As far back as 2016, the U.S. Army Research Laboratory (ARL) gave Hydro-Québec nearly $10 million for research and development of a portable rechargeable lithium-cobalt-phosphate battery. This was built in 2018 as per the Pentagon's specifications.
3. See "More Pay-the-Rich Schemes in the Name of Creating a 'Sustainable Quebec Economy,'" TML Monthly, March 2024.
(With files from U.S. government, Canadian Government, Quebec Government, Rio Tinto, TML, Reuters, The Logic, La Presse, Journal de Montréal)
This article was published in
Volume 54 Number 11 - November 2024
Article Link:
https://cpcml.ca/Tmlm2024/Articles/M540118.HTM
Website: www.cpcml.ca Email: editor@cpcml.ca