Bécancour Lithium Refinery DFS Projects $718M NPV, 21% IRR on 18,270tpa Output

A Definitive Feasibility Study Validates Bécancour Refinery’s Potential

Lithium Universe Limited (ASX: LU7) has released a Definitive Feasibility Study (DFS) for its Bécancour Lithium Carbonate Refinery in Québec, Canada, confirming the project’s strong economic fundamentals despite a challenging lithium price environment. The DFS outlines a pre-tax Net Present Value (NPV) of approximately US$718 million at an 8% discount rate and an Internal Rate of Return (IRR) of 21%, with a payback period of under four years. This robust financial outlook underpins the company’s decision to proceed to the funding stage.

The refinery is designed to produce up to 18,270 tonnes per annum of battery-grade lithium carbonate, a critical input for lithium iron phosphate (LFP) batteries, which are forecasted to dominate the global battery market. The project leverages proven technology from the Jiangsu Lithium Carbonate Plant in China, a facility that has set industry benchmarks for continuous lithium refining processes.

Counter-Cyclical Strategy and Market Positioning

Lithium Universe’s approach is notably counter-cyclical, advancing development during a period of lithium oversupply and price softness. This strategy aims to position the company advantageously for the anticipated market recovery driven by accelerating electric vehicle (EV) adoption and energy storage system (ESS) demand. The DFS financial model is based on conservative lithium price forecasts, US$1,170 per tonne for spodumene concentrate and US$20,970 per tonne for battery-grade lithium carbonate, both slightly below industry consensus, underscoring the project’s resilience.

Strategically located in Québec, the refinery benefits from access to low-cost, renewable hydroelectric power, reducing greenhouse gas emissions by an estimated 95% compared to conventional energy sources. The site’s proximity to North American spodumene suppliers and growing battery manufacturing hubs enhances its logistical and cost advantages, supporting the company’s vision of establishing Québec as a transatlantic lithium conversion centre.

Technical and Operational Strengths

The Bécancour facility design incorporates operational lessons from the Jiangsu plant, including a Zero Liquid Discharge (ZLD) system to recycle all process water, contributing to environmental sustainability and regulatory compliance. The refinery is engineered to process diverse spodumene feedstock from global sources, ensuring flexibility amid evolving supply chains. Metallurgical testwork confirms the ability to produce lithium carbonate exceeding battery-grade specifications, with low impurity levels.

Lithium Universe’s leadership team brings deep industry expertise, including executives who led the successful development and operation of the Jiangsu refinery and Australia’s Greenbushes lithium mine. This experience mitigates technology and operational risks that have challenged other lithium conversion projects worldwide.

Funding and Strategic Partnerships

The company is actively engaging with financial institutions and strategic partners to secure the estimated US$549 million capital expenditure. Discussions with original equipment manufacturers (OEMs) for offtake agreements are underway, focusing on North American and European EV supply chains. Lithium Universe plans to offer up to a 49% equity stake in the project to strategic investors, particularly those with spodumene supply or conversion needs, aiming to create a vertically integrated value chain.

Government support is anticipated through federal and provincial incentives, including refundable investment tax credits and income tax holidays, enhancing the project’s financial attractiveness. Regulatory engagement is ongoing, with proactive consultations to ensure timely permitting and community collaboration, including partnerships with local Indigenous groups.

Addressing the Lithium Conversion Gap

North America currently lacks operational lithium converters, creating a significant supply chain gap as battery manufacturing capacity expands rapidly. Lithium Universe’s Bécancour refinery aims to fill this void, reducing reliance on Chinese converters and aligning with national security and commercial objectives. The project’s focus on lithium carbonate production supports the growing LFP battery market, which is critical for EVs and grid-scale energy storage.

With a capital intensity comparable to peer projects and operating costs competitive due to Québec’s green energy, the Bécancour refinery is positioned to be a cost-effective and sustainable lithium conversion hub. The company’s comprehensive risk management framework addresses regulatory, market, operational, and financial risks, reinforcing confidence in project execution.