Rock Tech cuts lithium plant cost estimate by 54%

Rock Tech Lithium’s (TSXV: RCK; US-OTC: RCKTF) proposed Ontario lithium refinery will cost $596 million (US$420.9 million), less than half its previous estimate, although the company hasn’t explained most of the reduction.

The Red Rock converter, located in the namesake town about 900 km northwest of Toronto, would produce about 30,000 tonnes of lithium salts annually, according to a new estimate, released Wednesday. Planned annual capacity has declined only modestly, while the preliminary cost estimate has a margin of about 20%.

“The preliminary definitive feasibility study results are an important decision-making milestone for investing in a modern and scalable lithium production platform in Ontario,” CEO Mirco Wojnarowicz said in a release. “They underline that the Red Rock converter can be built at a highly competitive capital cost – a level not yet achieved within the Western lithium supply chain.”

The lower price tag could help Rock Tech attract financing to process Canadian lithium into battery chemicals for North American customers. Wednesday’s update didn’t establish the plant’s operating costs, investment returns or financing structure, which are expected in the final feasibility study in December.

Cost comparison

However, Rock Tech didn’t explain what drove the roughly 54% reduction from the $1.3-billion estimate carried in its August investor deck. Planned capacity has declined only modestly from 32,000 tonnes of annual lithium carbonate equivalent output, leaving unclear how much of the decrease stems from design optimization, use of existing infrastructure, equipment and procurement assumptions, or changes in the project’s scope.

The August deck and the new estimate also express production capacity differently, limiting a direct comparison of costs.

Instead of expressing output in lithium carbonate equivalent tonnes, Wednesday’s release instead cited tonnes of lithium salts. It didn’t reconcile those figures.

The new estimate comprises $546 million in direct capital costs and $50 million in owner’s costs. Further engineering and technical and financial reviews could change the figures, the company said.

China CEC Engineering is conducting the feasibility study, which began in June. The firm has worked on battery-material plants for BYD and Huayou Cobalt and will work with Canadian partners to adapt the project to local requirements, according to Rock Tech.

Rock Tech said in April that Red Rock would draw on the engineering completed for its fully permitted Guben converter project in Germany to shorten development timelines and reduce technical risk.

The company expects construction to begin in the second half of 2027, subject to the final study and required approvals. First production is slated for 2029.

Financing conditions

Rock Tech announced a proposed partnership with Tillsonburg, Ont.-based industrial developer BMI Group in April, under which BMI intends to invest $200 million in Red Rock. Rock Tech would control development and operations, with additional partners contributing equity.

The proposed investment was subject to definitive agreements and technical, financial and regulatory conditions.

The partners also proposed up to $30 million in initial funding for engineering, environmental work, permitting and early site development. The program is to combine partner contributions and government support, Rock Tech said in April.

The refinery would occupy BMI’s 1.4-sq.-km former Norampac paper mill site, about 100 km east of Thunder Bay. The property has about 120 megawatts of power capacity, natural gas access and connections to CPKC’s rail network, according to the partners’ April announcement.