Metals Australia eyes $1.3B Quebec graphite refinery

Metals Australia (ASX: MLS) has outlined an $884-million (C$1.26-billion) capital cost for its proposed battery-grade graphite refinery in Quebec as a new preliminary economic assessment highlights strong downstream economics tied to its Lac Carheil project.

The cost includes a $179-million contingency to build a three-module plant capable of processing 75,000 tonnes of flake graphite concentrate annually, according to a preliminary economic assessment issued on Tuesday. The plant would produce about 51,000 tonnes of battery anode material a year over a 25-year mine life, the company said.

“At a time when the world increasingly needs stable, secure, long-term supplies of critical minerals and the energy solutions that can be created from them, we have unveiled a world-class project that is aligned with that strategic need,” CEO Paul Ferguson said. “Our battery anode material refinery in Quebec is clearly one of compelling economic and strategic advantage for Canada, the province of Quebec and our stakeholders.”

Quebec is emerging as a focal point for graphite development in North America, with governments and industry pushing to build a domestic battery supply chain as the West looks to reduce reliance on China, which dominates both production and processing.

Canada is the only G7 country currently producing graphite, anchored by Northern Graphite (TSX-V: NGC; US-OTC: NGPHF) at its Lac-des-Iles mine, while projects such as Nouveau Monde Graphite (NYSE: NMG; TSX: NOU) Matawinie mine and Bécancour battery materials plant — backed by government funding and industrial partners — are advancing towards construction.

$2B NPV

The study for the refinery proposed near Baie-Comeau outlines a pre-tax net present value of $2.05 billion at an 8% discount and a 26% internal rate of return, with payback estimated at 4.5 years, underscoring the value uplift from converting flake graphite into battery-grade material.

The plant would anchor the downstream portion of Metals Australia’s proposed integrated graphite business in Quebec, sourcing feedstock from its Lac Carheil deposit near Fermont.

That project hosts 24.8 million indicated tonnes grading 11.3% graphitic carbon for 2.8 million tonnes contained metal and 25.2 million inferred tonnes at 9.1% for 2.3 million tonnes graphite, according to an August 2025 resource update.

The refinery is designed as a staged, three-module build, with the first 25,000-tonne-per-year unit targeted for startup in 2030 and additional modules ramping up production in subsequent years.

Metal demand

Graphite demand is expected to grow sharply, with the battery sector projected to dominate consumption as electric vehicle production ramps up, prompting calls for new mines and downstream processing capacity across North America.

Metals Australia said Baie-Comeau was selected as the preferred site due to its existing infrastructure, including a deep-water port, rail-ferry access and available industrial land, as well as favourable logistics for transporting concentrate roughly 560 km from the mine site.

Operating costs for the refinery are estimated at $2,362 per tonne of product, against a projected average selling price of $8,926 per tonne based on Fastmarkets data.

Tax credit

The project could also benefit from Canada’s clean technology manufacturing investment tax credit, which is forecast to return up to $263 million in cash rebates tied to capital spending, reducing the effective upfront cost.

Metals Australia plans to advance the refinery directly to a final feasibility study through 2026 and 2027 while conducting environmental work and Indigenous and community engagement in parallel.

The company is also progressing a separate prefeasibility study for the upstream mine and flake graphite concentrate plant, expected by mid-year, which would complete the proposed mine-to-anode materials supply chain in Quebec.

Shares in Metals Australia closed at A2.3¢ apiece on Wednesday in Sydney, valuing the company at A$19.4 million (C$18.9 million). They’ve traded in a 52-week range of A1.6¢ to A3.9¢.