When the U.S.-Israeli war on Iran choked off the Strait of Hormuz, the cost of gas shot up, as all drivers know, but so did an obscure industrial commodity that fuels the global mining industry: sulphur.
The price of this stinky by-product of oil refining spiked almost overnight, says Olivier Dufresne, CEO of Exterra Technologies, a Quebec-based critical minerals processing startup. That escalation, he adds, drove up the cost of sulphur, a workhorse ingredient in one of several reagents used in most mining operations. “When reagent prices go 500 per cent in the wrong way, the project just dies,” Dufresne says.
Yet an economic headache for miners marks a commercial opportunity for Exterra. The company has invented a novel technique for recycling reagents in order to slash mine expenses and reduce the environmental destruction created when these acid-based chemicals, which are used to separate valuable minerals from all the rock that comes out of the ground, leach into nearby watersheds. “We’re seeing ourselves as an enabler of a lot of Canadian future critical mineral projects,” he says, “starting by fixing a huge environmental liability left over from mining.”
Exterra is in the midst of building a $400-million (U.S.) commercial demonstration plant, known as Hub I, on the long-dormant site of what was once the world’s largest asbestos mine, in Val-des-Sources, in Quebec’s Eastern Townships. The goal is to show that the company’s technology can economically recover those corrosive chemicals as well as saleable minerals from the mine’s toxic tailings — a development, Dufresne says, that could unlock export markets for a Canadian startup and even transform a global mining industry that’s addicted to, well, acid.
In fact, Exterra is one of several Canadian firms working to develop such mineral processing systems, among them Montreal’s Nouveau Monde Graphite. These companies are aiming to commercialize technologies that refine the critical mineral ore coming out of the ground instead of shipping it elsewhere for processing. Such value-added activity, advocates say, generate jobs, profits and tax revenues within Canada while providing new export opportunities for domestic firms.
At a time when critical minerals have become so central to the electrification of the global economy and the energy transition, Canada will need to cultivate more technologies that go beyond digging huge mines and sending their contents elsewhere. Firms like Exterra have the potential to build out a domestic mining supply chain instead of simply selling these commodities to foreign firms. Yet the company’s particular chemical innovation also has the potential to solve an old and unresolved problem: cleaning up the thousands of defunct and polluted mines scattered across Canada’s hinterland.
A critical mineral gold rush
These days, the industrial world is in the throes of a high stakes race to secure the vast quantities of copper, nickel, lithium and other critical minerals needed to deliver the clean energy transition to electricity. Yet the critical mineral industry itself has long harboured a dirty and not-so-secret secret, which is its dependence on a range of acids — sulphuric, hydrochloric, nitric — to tease all the valuable minerals from the masses of earth and rock that come out of a pit. These acids linger in tailings ponds and rock piles created by mines, and, not infrequently, leach into local watersheds, producing severe contamination downstream.
They’re also expensive — as much as 70 per cent of a mine’s operating budget, Dufresne says, can go toward purchasing these chemicals and then processing them in energy-intensive plants into the reagents that separate the wheat from the chaff.
A mining engineer and former investment banker, Dufresne co-founded Exterra four years ago with a view to developing technologies that could clean up the mountains of abandoned asbestos tailings, which now sit on land owned today by the local municipality. After testing one approach — locking the toxic asbestos tailings in a limestone-like substance — Exterra pivoted and began focusing on the reagents.
“We started with a big Quebec problem, where we have hundreds of millions of tons of asbestos mine tailings that nobody really knew what to do with,” says Dufresne. “But when we started looking at these tailings, we realized that the reason so many critical mineral deposits today are still deposits and are sitting stranded, is the same reason the tailings in Quebec are still sitting there: the processing cost is way too high and creates way too much waste.”
Exterra’s engineers developed processing technology that recycles toxic reagent chemicals, such as sulphuric acid, in the asbestos tailings so they can be reused in a closed-loop system. Their process also yields saleable recovered materials, including silica and magnesium. Dufresne says the company has had to work with potential customers to assure them that the carcinogenic asbestos fibres have been destroyed during reprocessing.
“What’s interesting about its technology,” says Alex Zakreski, MaRS’s senior manager of cleantech ecosystems, “is not only that Exterra is taking a waste source and turning it into a productive resource, but also that it allows miners to access previously lower grade ores than they were ever able to access before.”
David Yeh, a San Francisco clean tech investor and former clean energy adviser in the Obama White House, likens Exterra’s game-changing innovation to the way that Tesla upended how cars are made. “They’re one way that Canada is becoming a natural resource superpower,” he says. “I think they have potential to be the Tesla of critical mineral processing.”
Building out Canada’s critical mineral supply chain
Through much of the postwar period, Canadian politicians have wrestled with a seemingly intractable economic headache: we tend to export our raw commodities instead of first transforming them into more valuable materials that may then be sold abroad. To get there, however, Canadian firms and investors need to backstop entrepreneurial and technology-driven ideas that can profitably fill a gap known in the mining sector as “midstream processing.”
To that end, Ottawa in 2022 launched a critical minerals mining strategy, which includes financing for new mines as well as advanced processing facilities. And Prime Minister Mark Carney earlier this year announced a G7 critical minerals action plan focused on building out supply chains, including processing operations like Exterra’s.
To prime the pump, the federal government has provided a $5-million infusion to validate Exterra’s technology and fund a pilot project. According to an NRCan spokesperson, the firm’s process ticked off several boxes, including critical mineral recovery from asbestos tailings and a “low-emission circular mining technology” approach.
Having completed its small-scale proof-of-concept testing, Exterra is raising funds to build its Hub I plant, with construction expected to take up to two years. Dufresne says the facility is projecting $100 million in revenues once operational. “It’s a project that will generate real revenue and real cash flow for a first commercial project.”
There seems to be an appetite for such technologies, says Yeh, who has advised Exterra on its commercialization strategy. “One of the key things that I’ve learned is that the world doesn’t have a shortage of critical minerals. It has a shortage of critical mineral processing that’s profitable and sustainable.”
Exporting Canadian mining tech
Canadian policymakers get excited about these kinds of technologies because they have the potential to become the mining industry’s equivalent of the auto-parts sector — a space driven by innovation and market access that is wedged between heavy upstream industries like steel and end users in the form of the major automakers’ assembly plants.
Such midstream companies have significant export potential, and also serve as a counterweight to Canada’s historic dilemma about exporting raw materials instead of processing them first. Given the dramatic reshaping of the Canadian economy in response to U.S. President Donald Trump’s trade war, the question is whether such innovation-driven firms are inevitably entrepreneurial one-offs, or if the right set of public policies could give rise to more such ventures.
Johns Hopkins University political scientist Bentley Allan, who is vice-president, future economy at the Transition Accelerator, doesn’t believe policymakers should take a laissez faire approach. “If we just let the market do what the market is doing, then we’ll get zero of these.”
Over the past three decades, China and, to a lesser extent Japan, have leveraged state power to build vertically integrated industries that begin with mining, Allan says. Much more recently, China has gone on a shopping spree for mid-range mineral processors and smelters, which has had the effect of forcing down global prices for their products. “What that means is that investors are really shy about actually adding more capital into this midstream space,” he argues. “If you want to contest China’s geopolitical dominance and control of these value chains, you need to create price certainty for Western assets.”
The Transition Accelerator’s policy prescription — known as “contract for difference” — calls for the federal government to guarantee a price floor for the output of processing facilities like Exterra’s Hub I, with a condition that if global market values exceed that minimum, Ottawa gets a share of the windfall. “If you’re using public money to de-risk a mining site,” Allan adds, “then the public should get paid.” (Other jurisdictions use tariffs or fees based on the carbon content of the product to protect their own mid-processing sectors.)
Yeh has a different diagnosis: From his perch in Silicon Valley, he says Canada has plenty of talented people building innovative technology startups as well as natural resources and deep-pocketed investors. The issue, he says, is that “there’s not enough help at the valley of death level” — venture capital slang for that period when a company is hustling to raise significant capital in order to scale up its operations but doesn’t have much in the way of cash flow.
“We’ve kind of been their sherpa, helping them hone their pitch and introduce them to the right funding parties,” says Yeh. “But more importantly, help them develop a commercialization road map to do something which, I think, is potentially groundbreaking.”
View the original article on the Toronto Star: Quebec startup on verge of transforming the mining industry
