Nemaska's lithium mine in Quebec to see delayed output on labor cuts

Pittsburgh — Nemaska Lithium has reduced workforce at its Whabouchi lithium mine project in Quebec, the company said Tuesday, in a move that will further delay production at what Nemaska says is one of the richest lithium spodumene deposits in the world.

The miner said it will explore refinancing options to allow an orderly resumption of activity at the mine, where development began in 2013 and was mostly suspended in November 2019.

The layoff impacts 29 employees, leaving about 30 employees to oversee essential activities at the mine so that development may resume once adequate financing is secured, the company said.

Nemaska's labor reduction at Whabouchi — part of the ongoing proceedings under the Companies' Creditors Arrangement Act in Canada — occurs at a time when lithium oversupply has driven prices down and prompted major producers to cut back operations. The S&P Global Platts lithium hydroxide CIF North Asia weekly price was assessed at $9,500/mt on January 24, down from $15,800/mt on January 25, 2018.

The layoff represents another hurdle for Nemaska at Whabouchi after the company announced its filing under the CCAA in December. Canada's CCAA is a federal law allowing insolvent corporations that owe their creditors in excess of $5 million to restructure their business and financial affairs. The corporate process under the act is less restrictive than Canada's more rule-based Bankruptcy and Insolvency Act.

"It is with great sadness that we must let go our colleagues," Nemaska CEO Guy Bourassa said in a statement. "Their hard work over the years, sometimes under challenging circumstances, allowed us to advance the Whabouchi project to the maximum while awaiting the required financing to complete it."

"This difficult decision was inevitable at this point," he added.

Once the mine is completed, Nemaska plans to be a vertically-integrated lithium producer for the electric-vehicle and energy-storage markets. The company plans to mine spodumene concentrate at Whabouchi and process it into high-purity lithium hydroxide at its electrochemical plant in Shawinigan, Québec.

The Whabouchi mine contains proven and probable mineral reserves of 36.7 million mt with an average grade of 1.30% lithium oxide, according to the company's website.