Disruptors

Beyond the Battery: Inside Quebec’s Mine-to-Refine Transformation

Jean Charest: For generations, Quebec has a helped to build Canada, whether it be through the forestry industry, lumber, agriculture, hydro, aluminum, aerospace, and culture. We’ve never been just a a resource economy. In fact, Canada’s very much a knowledge based economy, blessed with natural resources. But our challenge is to be actually more than that.

There’s a lot of demand for our natural resources. Now, critical minerals is probably top of the list, and the real challenge is, are we going to be just supplying them as a raw product or will we be building and making the finished products that the world needs?

John Stackhouse: That’s Jean Charest, former Premier of Quebec, and a longtime champion of building value added industries around this province’s natural resources.

He’s watched Quebec move from aluminum and hydro into a new chapter, critical minerals like graphite, lithium, and nickel. They’re the building blocks of a whole new economy centered around electric vehicles, grid batteries, and a lot of defense systems that Canada and our allies are going to rely on.

Jean Charest: The countries that will prosper in the future are the ones that are going to commit themselves to these added value products.

And that’s exactly where Canada is going. Not just as the builder, but also as a trusted partner for every one of our partners elsewhere in the world. And for Quebec, this is the choice that we have in front of us.

John Stackhouse: The opportunity here is enormous. As the world electrifies from cars and buses to data centers and defense, demand for battery materials is exploding.

The real danger is that we remain content to mine, rock and ship it overseas while other countries capture the jobs, the technology, and the leverage that come from refining.

I’m John Stackhouse. Welcome to Disruptors: The Canada Project. This season, we’re taking you on a journey across the country to meet some of the visionaries who are using technology to tackle our most urgent challenges. And in the process, sketch out a blueprint for a stronger, more competitive Canada.

Today’s destination, Quebec from the forest near Saint-Michel-des-Saints to the industrial hub of Bécancour. This is where Canada is trying to build something we’ve never really had before in graphite. A complete mind to anode supply chain at home. Now, if you’re not up on your battery terminology, the anode is the negative side of a battery, the part that stores and releases energy, and in most lithium ion batteries.

Today, that anode is made from highly processed graphite, whether it’s EV factories in Ontario and the US Midwest grid batteries that backup up clean power or high-end applications in defense and aerospace. All of them depend on secure supplies, a battery grade graphite. Yet for all the talk of energy transition, here’s something that may surprise you.

China currently refines more than 90% of the world’s graphite into battery anode material, export controls or political shocks there can ripple through automakers and grid operators everywhere. If Canada wants to be more resilient at home and more reliable abroad, we can’t just be the quarry. We have to be part of the refining backbone too.

In this episode, we meet Eric Desaulniers, founder and CEO of Nouveau Monde Graphite, or NMG. His company is trying to do something truly ambitious. Develop a new mine at Matawinie just north of Montreal, and link it to a refining plant at  Bécancour, down the St. Lawrence near Trois-Rivières. For customers looking for reliable supply outside of China.

The Federal government’s major projects office has now designated NMG’s phase two as a major project and plugged it into a new G7 critical minerals push. Canada is also backing it up with innovative offtake agreements designed to de-risk private investment. If all this works, Quebec won’t just get a mine, it will get to occupy the cornerstone of a more resilient allied supply chain and provide a new kind of economic engine.

Eric, you’ve, uh, been in the news of late Ottawa, has put  Matawinie and  Bécancour on the major projects list and tied you into a G7 critical minerals push with government trying to aggregate demand there. What exactly did you say yes to with all that?

Eric Desaulniers: I’m super fortunate to have the word  Matawinie and the word graphite being, uh, now very important in Canada.

Basically, we accepted the invitation of the Canadian government to be part of this major project office. We already started some construction activities, and in our case, in critical minerals. The important next big step is project financing, and we are collaborating with many different governmental bodies.

We have already the some investment from Canada Growth Fund that are a shareholder. We have letter of interest from Export Development Canada, letter of interest from Indian Infrastructure Bank on the debt side. And now the Canadian government becomes our customers with this strategic, uh, stockpiling. So we’re interacting with the public service, we’re interacting with NRCan.

So as you can understand, all those organization, and I’m not talking about the provincial level, uh, Investissement Québec, who’s a great shoulders since a long time. So having somebody like Dawn Farrell and their team who knows exactly the needs of a major project to get it to the finish line is very helpful.

John Stackhouse: That’s probably helpful for a lot of listeners who have heard about the Major Projects Office, but don’t know exactly what it does.

Sounds like in this case, it’s a bit of a concierge for you, helping you expedite working with different layers of government.

Eric Desaulniers: That’s how I see it personally. It’s a concierge for whatever the major project needs to get it across the line. In our case, it’s more about financing and other project, probably it’ll be more about regulation or or permitting.

But we also have an angle of discussing with all other J seven countries and allied countries because our production will go also to those countries. So there’s also this higher level of coordination that, you know, we need a government. To have a credible body alongside us to, to discuss with all those parties.

John Stackhouse: Eric, let’s step back and walk through this moment for critical minerals. Mining, of course, has been part of Canada since Canada was created. We’re pretty good at it, but suddenly there’s this intense focus, if I can put it that way, on critical minerals. What’s so critical about these minerals in terms of that redirection of our economy?

Eric Desaulniers: So we all know graphite these days for lithium ion battery, uh, being a huge market growing and it’s a market that historically was only in Asia, and now we wanna do those battery here. So we need to make big mines for lithium ion battery. So that’s one aspect of it. But in specifically graphite, there’s about 15 different applications.

A lot of those applications, it’s not big volumes that are justifying a mine by themselves. So critical minerals are minerals that are most of the time are used in small quantities. And there’s countries in Asia that can have the scale to accumulate the demand for those minerals to justify mines Here we are market driven, so we, we need to have enough of an economic, enough of a attractive project for capital markets to get it going.

So there’s a lot of those minerals, graphite, one of them, where the demand of the western world is big. But it’s not big enough to justify making mines to compete at the pricing level that the, uh, Chinese country are doing it, you know, so this is really for graphite specifically, it’s different. We have one mine since 36 years now, and before that mine, there was another one in Quebec, Canada.

So since a hundred years Canada is the only supplier of graphite of the G7 countries, and, uh, currently 80% of the market for concentrate of graphite comes from China and a hundred percent of the converted product led active and on material for batteries. Now the demand has grown at 106,000 ton per annum to fulfill the needs of the Western world, not only for lithium ion battery, but also for all the smaller volumes.

Application like polys, like thermoplastic, like foil for e-dissipation. A lot of defense application in their dual uses. But all markets that may be buy 10 tons a year, 25 tons a year, and we need to bundle all those 150 different customers who really need it, and if it doesn’t flow, there’s huge impact on our economy.

So that’s how I see critical minerals. It’s minerals that maybe won’t be financed by themself there, but need governmental intervention because if those minerals are not flowing, there’s a huge impact on our economy.

John Stackhouse: And it’s critical that you are doing the refining as well, is that correct?

Eric Desaulniers: Yeah, and that’s the second I would say big reason for working with the government is we have demonstrated we can build those verticals. We build the full vertical to Panasonic energy, a very, uh, sophisticated and, uh, company who know exactly the respect. So we have demonstrated that we can do that. Our goal is to work with the large defense contractor of the world. We wanna work with Canadian government and we want to be there proposing them carbon solution more than just a concentrate. It’s not a concentrate that goes in the submarine. It’s a, it’s a transform, uh, material for sure.

John Stackhouse: We’ve talked about why graphite is critical. The next question is how you turn that into real jobs and real assets in Quebec. For NMG, that means linking the mine and the refinery and rethinking how a mine is powered.

At  Matawinie, they’re working with Caterpillar on an innovative all electric mining fleet using Quebec Hydro to run the trucks shovels and crushers that used to run on diesel. So why is power so critical?

Eric Desaulniers: As we know, Quebec is one of the cheapest hydro, uh, and clean as well. In North America, it’s still 25% of our costs.

It’s an energy intensive process. We are developing our mining to be all electric with the solution provided by Caterpillar. So we’re optimizing the usage of this hydro to be carbon neutral. So having I’ll, I call it the four reason to buy in Canada. Great geology to start with, two hours away, we have a great industrial park in big and core with sheep, hydro, and all reagents and all the the right area to develop this safely.

And then we have the right talents and we have the customer now in our backyard who really need graphite and they really need to diversify from a single source in China.

John Stackhouse: And for those who aren’t familiar with  Bécancour, maybe you can put it on a map for us.

Eric Desaulniers: It’s between, uh, Montreal and Quebec City, so maybe Trois-Rivières was the second oldest city, uh, in Canada after Quebec City, I believe, or in Quebec anyway, and it’s, uh, right midway between the two on the South Shore, and that’s a large industrial park that was created around the nuclear plant of Gentilly that is now decommissioned. So there’s a huge industrial park.

There’s a second largest aluminum smelter operated by Alcoa and Rio Tinto, and we are right across the street from, from these guys. So we have already GM POSCO, that are quite active in the, in the area. We have Rio Tinto in the Quebec government through the naca, uh, lithium project, also in the park. And we’re the anode side uh, uh, we have bought our land in 2019 before. It all starts so much, much good entry point, much better entry point at the time. Yeah,

John Stackhouse: So we’ve got the rocks, we’ve got the electricity, uh, we’ve got the processing facility and ecosystem, and we’ve got the markets through the G7. We also have talent and that’s, uh, that’s critical as well. What kind of skills do you need today and what will you need going forward?

Eric Desaulniers: There are skills that we have and there’s skill that we need to build on and, and develop. So as I’ve mentioned, since a hundred years, Quebec is mining graphite. So to start with, we have hired a lot of people from that other mine that has experience in graphite.

So our CFO, our main, uh, processing people know upside down. Now to run this, the processing for graphite only is happening in China. We cannot build a commercial plant before having one. So now we are very active working thanks to our friend at Panasonic introducing us the right suppliers who build plant for them in Asia before going there, understanding how it works, and make sure our engineers that are learning the right way to operate at scale, active annual material plant.

We have a lot of expertise in leaching, we, the purification is a leaching plant, so Rio Tin two has a, has a similar thing in sore. So there’s an ecosystem we need to go take advantage of the smart people there, but not be, uh, too much arrogant. And we need to be humble. We have stuff to learn from Asia. We need to be there, have the right partner like Panasonic, who will guide us through that and make sure we, we make a success on everything we do.

Everybody at NMG, we’re 120. We have maybe 35 engineers. Everybody’s super happy to work close to home. You don’t need to do fly in, fly out, go work in Africa or something like that. So we are very fortunate. Me the first that I can go at Christmas at the mine site and all my kids are super happy and I can bring all my family. It’s fun to develop a project in Canada. So we need to take advantage of that.

John Stackhouse: If you stop the story there, it would be a great Quebec industrial play, but this isn’t just about one province. It’s about how Canada fits into an allied supply chain at a time when export controls and geopolitics are reshaping who gets what. So how does a hundred thousand ton mine in Quebec stack up against what China can offer?

Eric Desaulniers: Yeah, in China there’s many, many operations. So in flight graphite today, maybe it’s 1.5 million ton, uh, a year in the world. But if you, you follow the growth they have in China, even though they are 80% of the market today for concentrate, they are a net

importer of graphite, they import everything they can from Africa for their big refining machines. So they are, they are building so much capacity for, uh, active anode material that they need more graphite that they can produce inside the country. So that’s really the, the situation out there. So here our market, like two years ago, I sold twice the production of the mine.

Two years ago, it was all dedicated for lithium ion battery because we had customer like Panasonic Energy, General Motors that were quite aggressive securing, uh, locally, uh, graphite. Now, more recently, we, uh, revised this strategy before getting to FID and that’s where 55% of our production will go in lithium ion battery

now, allowing us to diversify in those very strategic and other markets, like I’ve mentioned before, uh, refractory bricks, like the bricks you put in the steel foundry that are, are, it’s still today the biggest market for natural graphite. And then all the other, uh, 15 application I was talking about secured by the Canadian government and G7 countries to make sure we have the time to develop those verticals to support, uh, very important things in our economy.

John Stackhouse: That’s gotta change the way you build and manage a company to be working so deeply with governments, not just the Canadian government, but as you say, allied governments across the, uh, the G7.

Walk us through how your marketing and distribution strategy changes now that you’re so, uh, connected through the G7.

Eric Desaulniers: When you work with the credible shareholder to start with, from the private sector, it helps a lot. So, for instance, we have Mitsui as a shareholder, uh, since, uh, working with us since 2018.

So that’s a good example. Uh, you know, we have Panasonic now, but we are a pre-revenue company. We don’t have a long history like Rio Tinto of building mines and a big, big cash flow. So we need to bring partners on board to be very effective at the, at selling our message to the government. I think that’s the first step for, for Rio.

John Stackhouse: Longer term, when you think about allocating supply, you’ve got some pretty powerful, uh, and I’m assuming competing interests there. How are you thinking through whether your graphite goes to, uh, defense procure, the Pentagon being the biggest or an electronics manufacturer like Panasonic?

Eric Desaulniers: Yeah, so we have two things.

Uh, I would say three different things In our marketing strategy, we have long term offtake agreement. That’s what we have with Panasonic Energy. We need to deliver those 13,000 ton of active and old material. They require 25,000 ton of concentrate. So that’s about a quarter of the mine that is long-term full vertical that we do with Panasonic.

We have, uh, another off takes like, uh, with Traxxis. Traxxis is um, an established trading house who will represent us with a list of about 12 exclusive customer in the refractory markets. Then we have the Kenyan government and we built a similar structure with the Kenyan government where we have an offtake for a, for a certain volume at a fixed price for North American, uh, pricing.

And now what the government did is really to make, uh, the right instrument to get us. Going and construction so we can, uh, play ball the same way the market is working today, instead of asking to 150 different people to do long-term agreement. And in exchange of that, they will ask, uh, too much discount.

So it’s not good for a company so. The government is bridging and making an instrument that, quite frankly, at the end of the day, I think they will make money on because we will share 50 50 the upside, if we sell at a higher price in the, in the future, the company need to reimburse the loss before, uh, before getting a 50% of, uh, of profit.

So I think it’s a fair deal where taxpayer, at the end of the day, will most likely make, uh, a little bit of money.

John Stackhouse: So just to clarify that point, ’cause it’s really important, the taxpayer still has a risk on the downside, and that’s fine. You’re investing in a venture and an economic opportunity if you’re the government of Canada, but it’s mitigated by the company’s share of the losses.

Is that correct?

Eric Desaulniers: Yes, that’s one mitigation point. And the other mitigation point is the fact that since, uh, as I’ve mentioned 36 years, we have history for pricing. We have, uh, we know very well the customers, so there’s also this, we are not the, the fixed price given, it’s the current market price that is very much depleted by our friend in China.

So it’s a good starting point to start this instrument. So, the downside is protected by, uh, the government, otherwise, we would not be able to get going into construction. The bank won’t borrow us the money. However, as long as there’s no accumulated loss on the instrument, we will share 50 50 the upside.

John Stackhouse: This is a really good illustration of the new age that Canada and others are in. Uh, as you’ve been indicating, China has market dominance globally, both on the supply and in some ways on the demand side. So it can drive the market, it can flood the market if it wants, not just in, uh, graphite or lithium, but, uh, lots of other critical minerals, which has made it really hard for free market.

Mining operators around the world because it takes years or decades to get a payoff for the millions that it takes to build a a mine. And if you’ve got that price volatility, it gets pretty queasy. Uh, or it makes investors pretty, uh, pretty, pretty queasy. Now you’ve got this security of demand and pricing through these off takes and government supports that gives your investors, that kind of security so they can make these, uh, commitments. Exactly. Kind of a new, a new way of mining and mining finance in Canada.

Eric Desaulniers: I’m dreaming of a Canadian critical mineral exchange. Uh, that’s something in the future that could be very, uh, very interesting.

John Stackhouse: Take us deeper there. What’s needed for a Canadian critical minerals exchange?

Eric Desaulniers: How mining is financed, usually it’s true hedgings true futures. Because there is a, a liquid market given by the London Metal Exchange. Basically, you know, you have a gold price, everybody knows gold, that people play gold and in critical minerals, that’s a challenge. It’s all opaque. Driving, more visibility on pricing for everyone, we’ll help finance those critical minerals. This is what we asked the government said, gentlemen, you can finance all the project, but that’s not the goal. The goal is to attract private capitals in this and to attract private capitals, we need to have certainty on pricing and the right instrument. That not only, uh, the, the capital market will like, but also the debtor and also the, the taxpayer.

So not an instrument that, uh, government will lose money and subsidize to lead this process. So I think we found the right spot.

John Stackhouse: The G7, as you’ve referenced, is a really important and powerful counterweight to China in global markets, particularly for that security of demand. So the G7 is Canada, the US, some key Europeans, Germany, Britain, France, Italy, and of course Japan.

You’ve got deep ties with Japan that sounds like they are continuing to be constructive. The big question obviously in the G7 right now is the G1. It’s the United States and how cooperative it will be if it will do what’s in its interest, and then maybe take a different path if it’s not in its interest.

How are you thinking through that strategic uncertainty within the G7.

Eric Desaulniers: I think you, you raised a valid challenge. You know, we need to make sure we have instruments and we have dedication that will survive election, you know, and, and survive momentum in, in each of these democracy. We see the US government being very active now, very supportive.

They understand that they are in trouble if those critical minerals are not coming. So we have very positive discussion with the US government now that we have, under the leadership of Canada, made this instrument. US government made other deals. I think it’ll be very beneficial for both side of the the border to do a deal on critical minerals.

We’re neighbor at the end of the day. This is something that we’re looking forward to do in the near future. Continue our conversation with the US government alongside Japan and European countries.

John Stackhouse: As you said earlier, graphite is also essential to a lot of, uh, defense products, maybe aerospace stationary storage for batteries as well.

It’s not just EVs No. But over the next decade, how much is graphite an EV story still, or when will it become a non EV story?

Eric Desaulniers: Two years ago, we were 90% plus going in either EV or power storage, but anything lithium ion battery related, now we’re more going 55% of our production and that that I think will be the firm deal getting into construction.

So I think it’s a good ratio, 55 in batteries. 20 in refractory bricks and 25 in other strategic markets that are providing the best return. But those strategic market will require us to develop a value added product, as we will announce shortly. But there’s, not only concentrate, you can do expandable graphite, expanded graphite, graphene, all those different product because it’s, uh, as I’ve mentioned, 15 different strategic application, a lot of it defense related, that you need to work hard with your customer to do the right transformation.

So we will need this 25% remaining. A lot of work, a lot of value is there, and now the instrument from the government give us the time to develop these verticals. We are in Canada, we’re lucky, we have the, the, the smart engineers, the smart PhD, the right laboratory, the, the right, uh, security of supply. So the, the defense contractor need to buy locally.

It’s not like an option. They need to come and, and buy here. So we need to take advantage of that, but we need to work with them to do the, a useful product, not only concentrate, and we can do it. That’s the Canadian advantage. In Quebec, uh, we are fortunate with the geology, so I like to say we have the right geology, the right tools, like cheap hydroelectricity and the right talents to be very cost effective in this market.

We have the best graphite in the world in the ground. Probably the five best deposit in North America are located in Quebec, thanks to the Greenville Province, and we’re fortunate to have that.

John Stackhouse: What a great picture you’re painting of today and the, uh, the horizon that we’re looking at. Maybe Eric, as we wrap up, I can ask you to take us over the horizon.

It is, let’s say 2035, what’s the opportunity for Quebec and for Canada if we get all this right?

Eric Desaulniers: I thought when I started the company 2011 was, uh, was very far. It’s not that far away. So for a mining project, uh, 2035, in 10 years, we will be fully operating. And we will be like, the meta mine will be in the phase of probably of growth, potentially thinking about, uh, increasing capacity.

Because the goal is really to develop a lot of different verticals. So for our specific project, the main thing we need to develop is the, the growth in r and d, making sure we, uh, work with our customer developing new materials and explore all possibilities of graphene, for instance. That is at the end of the day, graphite transform product.

So this is really something that captivate our r and d team and myself to not only, uh, stay in the current market of active anode material and concentrate in what we know, but keep developing solutions using carbon that are useful for a lot of different things in our economy.

John Stackhouse: Wonderful. Well, Eric, congratulations on all that you’ve got going. It’s, uh, impressive and exciting for the company and for Quebec, but really important to where Canada is going.

Eric Desaulniers: Thank you for having me, John. Looking forward to keeping in touch and we’re super proud to

develop this project for Canada.

John Stackhouse: To build a more resilient economy and meet the demands of our allies. We’re going to need more people like Eric. Leaders who are willing to rethink old systems and take Canada beyond mining and shipping. But as Jean Charest reminds us, this isn’t just about one project or one province. It’s about building the industrial backbone, the power lines, refineries skills, and financing mechanisms that turn critical minerals into long-term prosperity.

We simply can’t keep planning our resource strategy, one mine at a time or one export deal at a time. We need to think like builders, not just exporters. Because the next frontier for Canada isn’t only in the rock under our feet, it’s in the systems that refine it here and connect us to a fast changing and increasingly uncertain world.

The opportunity for NMG and frankly for Canada isn’t just mining and technology, it’s global strategy. Canada has a unique advantage, clean power, trusted institutions, engineering talent, and a resource base that the world needs. The challenge. And yes, that opportunity is to turn all this into a durable edge.

So when our partners look for a reliable and critical supply, they think Canada. I’m John Stackhouse and you’ve been listening to Disruptors, the Canada Project, an RBC podcast. If you wanna hear the whole series, please subscribe wherever you get your podcasts and give us a five star rating that will help others find these stories and share them.

And if you wanna learn more about the Canada Project, head over to rbc.com/thought leadership. Join us next time as we continue our journey across the country in search of the innovators and leaders who’re helping Canada meet this moment boldly with their eyes fixed on the future and their feet firmly on Canadian ground.