Investor Alert: Social, Environmental & Financial Risks for Nouveau Monde Graphite

MiningWatch Canada

(Toronto) MiningWatch Canada is concerned about ongoing social, environmental and financial risks of Nouveau Monde Graphite (NOU; NMGRF; NM9) Matawinie Project near Saint-Michel-des-Saints, Quebec, Canada.

After a careful review of the project’s documents, multiple onsite visits, and active participation to Quebec’s environmental review and public panel hearings held recently, MiningWatch Canada is primarily concerned about the following risks:

  • Social division, no social licence: Contrary to the company’s claim, the community remains profoundly divided over the proposed project. Recent company polls are misleading and do not account for the cottaging and recreational community, which represents 50% of the local population and 51% of the property value (assessed at $201.8 million in 2019). This community is largely opposed to the project and represents a significant social, legal, and financial risk to the company.
  • Touristic and ecologically sensitive area: The proposed 2.6 km open pit mine project is located in the heart of an ecologically sensitive and touristic area, next to the world-renowned Mont Tremblant National Park and within the Lac Taureau Regional Parc watershed—the largest and closest recreational water body north of Montreal and the first inhabited park in the province. This area welcomes tens of thousands of visitors each year. It is also home to hundreds of birds, mammals and other animal species, including several vulnerable and threatened species.
  • Millions of tons of acid generating wastes: The low-grade graphite project would produce over 100 million of tons of tailings and waste rocks, which contain significant quantities of acid generating sulphidic minerals, heavy metals, and other toxic substances. The company proposes a dry, co-disposition stacking method for the mine waste materials, covered with a soil barrier in a slope. While innovative, this exact method has not been field tested, nor yet proven to work on any site in the world—least of all not at this scale and with this type of material in a northern, wet climate. If it fails, the site risks generating acid drainage for centuries to come. The primary proposed contingency measure is the building and operating of a water treatment plant, which has not been fully costed in the feasibility study.
  • Oversupply & shifting graphite market: The graphite market is currently saturated with enough known reserves to supply the demand for about 300 years at the current rate of production—a 323% increase over the last 10 years. In addition, a significantly increasing proportion of the electric vehicle battery market is shifting toward synthetic graphite produced from petroleum residues (part of a more efficient circular economy). Synthetic graphite provides a more stable and reliable source of graphite (quality/quantity) and avoids social, environmental, and financial risks associated with mining. Second and third-generation batteries are also shifting toward solid-state technologies with metal anodes as a substitute for graphite. Nouveau Monde’s feasibility study does not account for this shifting market, overestimates certain revenues, and conversely, underestimates many risks and costs.
  • An “all-electric mine”: The company “aims” to an all-electric mine by year 5 of operation if equipment is available and if costs are justifiable. The all electric scenario risks are not fully costed in the feasibility study. Currently, this objective appears to serve more as a public relation strategy than an actual operational goal.
  • Low ore grade: Nouveau Monde’s project (4.35%) has among the lowest graphite ore grades in the world, three times lower than the Focus Graphite (15.1%) deposit in Quebec, Canada, four times lower than the Syrah Resources (16.2%) deposit in Mozambique, and nearly six times lower than the Mason Graphite (27.8 %) project, also in Quebec. Nouveau Monde’s project would generate three to six times more mining wastes per unit of graphite produced as these other projects. In Quebec, Mason Graphite (LLG; MGPHF) has received strong community support, already has its permits, and yet struggles to complete its financing in the current market.
  • Indigenous rights: While the company has signed a pre-development agreement with the Atikamekw Council of Manawan, it has not yet signed an impact and benefit agreement for the mine itself. The Chief & Council recently cancelled the environmental review panel hearings that were supposed to be held in the community. It is not clear how and when these hearings will be reconvened.

MiningWatch Canada commissioned and produced four reports on the project -- attached here -- including two from Kuipers & Associates engineering (2019 & 2020), one from the engineer and researcher Philippe Marion (2020), and one with our regional partner Coalition Québec Meilleure Mine (2020). While MiningWatch recognises efforts by the company to reduce impacts of its project, current measures remain insufficient to address all the above risks. Nouveau Monde will be participating to this week’s PDAC Convention in Toronto.