Finland’s export-credit agency Finnvera has opened a potential financing route for equipment supplied by Metso to Avalon Advanced Materials’ Lake Superior lithium-processing facility in Thunder Bay, Ontario, following a non-binding letter of interest covering approximately €100 million of Finnish equipment and services.
The letter followed an application submitted by Finland-based Metso, which is expected to provide processing and refining technology under a future commercial agreement. Finnvera has determined that the proposed package contains enough Finnish export content to proceed to a more detailed assessment. Under its standard financing framework, Finnvera can cover as much as 85 per cent of eligible Finnish goods and services. Applied to the indicated procurement package, this could support approximately €85 million in buyer credit, with potential additional coverage for eligible local costs, guarantee premiums and capitalised construction interest.
Potential buyer-credit structure
The prospective support could be provided through a buyer-credit guarantee for an arranging commercial bank. Finnish Export Credit, Finnvera’s financing subsidiary, could also participate directly as a lender. No financing bank has been appointed at this stage. The proposed credit amount, maturity, repayment structure, covenants and security arrangements remain under discussion.
Finnvera’s letter does not constitute a financing commitment. Any eventual facility would remain conditional on technical and environmental due diligence, credit approval, an acceptable project-financing structure, completion of final documentation and compliance with Finnvera’s internal project limits. Avalon must also complete the underlying commercial supply agreement with Metso.
The potential Finnish-supported equipment package forms only one part of the broader Thunder Bay development. Avalon’s 2024 preliminary economic assessment outlined a processing facility designed to produce 30,000 tonnes per year of battery-grade lithium hydroxide monohydrate.
The assessment estimated C$1.2 billion of initial capital expenditure and C$1.3 billion of total capital over the project life, placing the overall development requirement well above the value of the equipment package being considered for Finnish export-credit support.
Thunder Bay project economics and processing technology
Avalon’s preliminary assessment calculated an after-tax net present value of C$4.1 billion and an internal rate of return of 48 per cent. The economic model included a long-term lithium hydroxide price assumption of approximately US$26,000 per tonne. Those figures remain based on preliminary project economics and are sensitive to lithium product prices, the cost of spodumene feedstock, processing performance and the availability of investment tax credits.
Metso’s proposed processing flowsheet incorporates calcination, pressure leaching, conversion, ion-exchange purification and crystallisation. Financing this equipment through an export-credit structure could align the funding profile of long-life processing assets more closely with their operating lives than relying solely on parent-company equity. Avalon plans to combine potential Finnish export-credit support with financing from Canadian and US government programmes, commercial project debt, strategic equity and possible customer or offtake funding.
Broader funding requirements remain
Even if Finnvera provides support at its maximum standard coverage level, the potential €85 million facility would finance only a portion of the Thunder Bay development. Avalon would still require committed sources for sponsor equity, contingency funding, working capital, infrastructure and equipment packages outside the Finnish-supported procurement scope.
The immediate financing milestone is therefore the conversion of the indicative €100 million Metso equipment and services package into an executed commercial contract, followed by development of a bankable buyer-credit facility with an identified lending institution.
