Canadian miner to start graphite project in challenge to China dominance

Nouveau Monde Graphite Inc. expects to formally green-light plans this week to build one of North America’s few graphite projects, as countries seek to weaken China’s dominance over the critical mineral.

A previously announced financing package of about $645 million in gross proceeds was backed by shareholders Wednesday. The money is to be used to develop a graphite mine in Saint-Michel-des-Saints, Quebec, about 100 miles north of Montreal, and to build a concentrator nearby.

Graphite is a key material in lithium-ion batteries, prized for its conductivity. China is the world’s major supplier.

A construction team is already on site and more than 50% of the project’s capital expenses are secured through contracts, according to a company statement. Costs are estimated at about $474 million, and commissioning is projected by the end of 2028.

The company’s plans also include a refining facility for the production of 13,000 metric tons per year of active anode material, which accounts for about half of an electric vehicle battery. The plant is to be built in Becancour, Quebec, where General Motors Co. and Rio Tinto Group-backed Nemaska Lithium Inc. are already constructing EV battery-component plants.

Nouveau Monde’s ambitions have been slowed down by automakers’ retreat on electric vehicles, with GM withdrawing from the project and Panasonic Holdings Corp. scaling back an offtake agreement. The expected full production at the Becancour facility has been lowered by 70% and will entirely go to Panasonic.

“I never thought the mining project wouldn’t get off the ground,” chief executive officer Eric Desaulniers said in an interview. “It is too solid and too far along — and too necessary, too.”

The Canadian government stepped in last fall to provide investors with more certainty by ensuring the purchase of 30,000 metric tons of graphite concentrate per year, or slightly less than a third of the mine concentrator’s output, at a fixed price to support the venture. The government also selected Nouveau Monde as one of the major projects to prioritize.

Export Development Canada and the Canada Infrastructure Bank committed $335 million in debt. The Canada Growth Fund, the Quebec government and Italian energy firm Eni SpA will provide a private placement of $213 million, which needed Nouveau Monde shareholders’ approval. A bought deal public offering will bring in $96.5 million. Mitsui & Co. is among Nouveau Monde’s largest shareholders.

Eni also signed a letter of intent for a potential offtake of graphite concentrate or active anode material from the Becancour plant.

Desaulniers said the challenges tied to slower EV adoption have pushed his firm to diversify the potential customer base for graphite concentrate — including the energy storage and steelmaking industries.

“We have a plan that’s much better in terms of diversification, so we’re not at the mercy of a single market that can sometimes change quickly,” he said.

BloombergNEF foresees a technical deficit of graphite globally by 2032 as demand for lithium-ion batteries soars.

“China is the world’s dominant graphite supplier, a position it maintains through 2050 in BNEF’s outlook despite other countries’ efforts to localize production,” it said in a report last month. “New players struggle to compete with China’s scale, especially given the high energy and chemical costs of spheroidization and graphitization.”

(By Mathieu Dion)