Lithium Universe Ltd (ASX:LU7, OTC:ESMAF) will adopt the 'same equipment, same supplier' procurement strategy successfully implemented previously for its planned Bécancour Lithium Refinery in Québec, Canada.
This strategy was used by Jiangsu at the Galaxy Resources’ project with Lithium Universe seeking to replicate this success in Canada.
Proven strategy
Jiangsu had 60-70% of its plant supplied by top-quality Chinese suppliers, with the remainder coming from worldwide suppliers.
By implementing rigorous quality control measures at the supplier's manufacturing site, Galaxy was able to achieve top-quality equipment that aligned with international engineering standards.
This procurement strategy has been adopted by LU7 after key board members and the CEO visited Hatch Ltd’s Shanghai procurement office.
LU7 said local fabricators had been servicing the Chinese lithium refinery industry for the last 15 years and key suppliers utilised for the Jiangsu project had become the backbone of the rapid expansion across the country.
'Same equipment, same supplier'
“These same key suppliers utilised by the Galaxy team are well-known, reliable and provide a known quality product,” the company said. “It is critical to reduce the number of unknowns when planning the construction of the Bécancour Refinery and partner with vendors who have a proven track record of delivery of specific plant and equipment.”
As part of this strategy, LU7 will firstly utilise proven equipment designs, which will reduce engineering work required for the project’s definitive feasibility study (DFS) and fast-track the process.
Secondly, with this strategy, the company can tap into the original supplier’s design and construction experience, minimising the cost and time associated with repeated detailed engineering.
Preferred suppliers will also be able to provide accurate quotations, as opposed to budget numbers.
The company said that alternative suppliers closer to Canada would be used if the original suppliers were no longer in business.
“Sticking with what works”
“A key aspect of our approach is to utilise equipment and top-quality suppliers that we have used before," chairman Iggy Tan said. "By sticking with what works, we aim to expedite the engineering process and ensure seamless coordination among all parties involved.
"Building on the successes of past projects, such as Jiangsu where 60-70% of our suppliers were Chinese, we are confident in our ability to manage quality while optimizing efficiency.
"By fostering strong partnerships and implementing rigorous quality control measures, we are well-equipped to deliver a quicker, cheaper and more reliable project.
"One of the most significant advantages of our approach is the reduction in lead times, allowing us to execute tasks with greater speed and precision.”
Shanghai meetings
The procurement strategy along with design and logistics were discussed and reinforced at the meeting in Shanghai.
LU7 also met with the key equipment providers in Shanghai to finalise the design for Bécancour with the kiln to be fabricated in China and shipped to Canada for installation.
Another advantage of utilising established offshore suppliers is the mitigation of potential scheduling disruptions caused by the increased demand for construction materials and highly skilled tradespeople.
This surge in demand is anticipated due to the numerous battery supply chain projects scheduled for construction over the next four years in Canada.
Bridging conversion gap
Lithium Universe is dedicated to bridging the lithium conversion gap in North America while supporting provincial and federal governments in restoring Canada’s battery supply chain.
The company's objective is to collaborate with local Canadian suppliers, providing training and facilitating knowledge transfer while utilising the Bécancour Refinery as a blueprint for replication elsewhere in North America.