Lithium: Canada becomes the engine of Western emancipation vis-à-vis China

Canada has significant lithium reserves and can benefit from the Inflation Reduction Act. Politicians have recognized the potential of critical minerals and are positioning the country as an aid to Western emancipation against China.

1,076,396 km2: The Canadian province of Ontario is about three times larger than Germany. 120 kilometers2 which are now owned by Australian lithium explorer Balkan Mining And Minerals (ASX: BMM, WKN: A3C28E, ISIN: AU0000157455).

In April, the Company announced the acquisition of the Barbara project in the Glacier Lake area, approximately 160 km north-northeast of Thunder Bay. After Gorge, Tango and Arrel, Barbara is Balkan Mining’s fourth project in the province. Another project is in Quebec, and there are two projects in Serbia. Canada is at the heart of the company. And there’s a good reason for that: geology.

Huge lithium deposits lie dormant in Canada

Huge quantities of lithium are suspected in Canada – in Ontario as well as in the Northwest Territories, Manitoba or Quebec. Lithium is mainly extracted from brines and granitic pegmatites. Both geological phenomena occur in Canada.

Much of the resource comes from granitic pegmatite, a coarse-grained igneous rock that contains spodumene, petalite and lepidolite – which often contain lithium. The advantage of hard rock projects: The same extraction methods can be used as in conventional mining – and the environmental risks can also be compared to those of conventional mining. In the case of the production of lithium from brine, on the other hand, the possible damage to groundwater is considered problematic.

Karl Simich has been director of Balkan Mining since late 2022. According to the longtime CEO of Australian mining company Sandfire Resources, he made a conscious decision in favor of a company with a strong commitment to Canada. “If we can think it, we can do it” is his motto. In the early stages of exploration, there are few rules and many options. Associations with the gold rush come to mind.

High-grade discoveries are typical of the early phases of major exploration trends. Balkan Mining has already been able to record promising results during the due diligence phase for the takeover of the Gorge project. Of five rock samples taken, four contained Li2O values ​​above 3.78% – peaking at 5.75% and 6.80%.

Geographical and political proximity with the USA as a strategic advantage

Canada offers another strategic advantage to lithium companies: its proximity to the United States. For one thing, the geographic distance to automotive hubs like Detroit is relatively small – especially for businesses in Ontario and Quebec.

On the other hand, there is also a great political proximity between the two countries. The Canada-US Free Trade Agreement is important for all automakers who want to sell electric cars in the United States and benefit from Inflation Reduction Act tax credits. Going forward, these credits will only exist if critical minerals like lithium are mined in the United States or in a country with a free trade agreement.

For this reason, lithium producers are often sought-after future suppliers long before production begins. Automakers secure early access to scarce capacity with “offtake agreements”.

Determined policy

When politics is about lithium, it is inevitably about China. Western countries want to put an end to the sometimes tragic dependence vis-à-vis the Middle Kingdom. The Canadian government is very clear on this point.

Last fall, the government ordered three Chinese companies to divest their key mineral holdings, citing national security.

The Critical Minerals Strategy was also launched last year, which includes the promotion of exploration activities. Canada views critical minerals as a “chance of the century” for the country’s development.

The country also contributes to the networking of Western bloc countries. In mid-May, Prime Minister Justin Trudeau signed a memorandum of understanding on critical mineral supply chains with South Korean President Yoon Suk Yeol. Such a declaration of intent was signed between Canada and the Volkswagen group last summer.

Environment conducive to mining

Canada has always been a favorable mining environment for exploration companies and mine operators. In the Political Perception Index, which is calculated once a year from a survey of mining companies, Canadian regions consistently come out on top. This year, three provinces made the world top 10: Newfoundland and Labrador, Alberta and New Brunswick.

However, Balkan Mining regularly reports on the progress of Canadian projects. Recently, shareholders were informed of the results of the initial channel sampling program at the Tango Lithium project. Assays returned strong spodumene with lithium mineralization in all channel samples and assayed up to 3.4% Li2O – with an average of 1.49% Li2O.

Ross Cotton, the company’s managing director, sees this as confirmation of earlier results in the area and stresses that the exploration phase now needs to be advanced quickly.

Andy Booth

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