Last summer, “the sky was abuzz with helicopters and planes servicing many lithium exploration sites,” David Connelly says. Since then, there’s been a dramatic downturn in exploration activity for lithium in the NWT.
While lithium has been in the NWT for a long time, it’s only recently that the market has changed, demanding more of the metal for its use in batteries for electric vehicles or EVs. Connelly, who’s a mining consultant, said the price of lithium spiked two years ago, driving around a dozen companies to explore for the metal in the territory.
Lately, however, “there’s been a very dramatic turn down,” Connelly said, as the sector is dwindling following that initial excitement.
Francis Macdonald, chief executive officer of mining company Li-FT, which has been exploring for lithium in the NWT, agrees that “things have definitely slowed down.” He said that’s due to global market conditions, including China’s outsized control of the market and its ability to control the price of lithium.
High supply, low demand
“There was a lot of supply that was brought online in lithium, and the demand at the same time has decreased slightly for a short period,” he said. “In terms of the long-term narrative of energy transition, EVs, I think everything’s still on track.”
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Electric vehicles are seeing “quite negative sentiment” in the media right now, Macdonald said, pointing to both Ford and BMW scaling back their EV plans for the time being.
“That negative sentiment is also affecting investor sentiment,” he said. “It’s difficult to raise money for lithium right now.”
Li-FT is still in the exploration stages. In September, it will be releasing its first resource estimate indicating how much lithium may be in the ground. From there, they’ll be completing economic studies, “which will tell us how much it’s going to cost to get out of the ground and how much actual profit you could make off of a lithium mine around Yellowknife,” Macdonald said.
Li-FT has previously said that lithium mining in the NWT has to happen quickly, or not at all. Macdonald said speed is still an important factor.
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“Lithium is a new commodity,” he said. “We’ve never needed it in the quantities that we need it right now.”
‘A missed opportunity for the Northwest Territories’
But there’s been a lot of lithium discovered in the world, Macdonald said.
“The supply side probably isn’t going to be the issue in the long term. And so if that’s the case, it’s really the projects that get to market first that are going to be able to survive these price swings, because they’ll capture the market share early on,” he said.
“This would be, in my opinion, a missed opportunity for the Northwest Territories.”
Although Canada has identified lithium as a critical mineral, there’s currently just two lithium mines operating in Canada (one of which, in Manitoba, is owned by a Chinese company).
It takes somewhere between eight and 20 years to get a mine online, Connelly said.
“While the price has gone down and the exploration activity has decreased everywhere, it has decreased most dramatically in the Northwest Territories,” Connelly said. “There is still activity going on in Quebec and Ontario and Manitoba.”
Part of the reason is that it’s less expensive to carry on mapping and sample collection in southern Canada.
While Connelly said he’s “confident that the price of lithium will recover,” he questions whether that will be enough to improve the investment climate in the North.
“We are the most expensive jurisdiction to operate in because of our lack of infrastructure, high power costs,” he said. “If Quebec and Ontario satisfy the market first … then why would they come [back]?”
