Canada Fast-Tracks Lithium Refining to Secure Battery Supply

An US$85 million staged financing package helps Canada cut risk, emissions, and reliance on foreign lithium processors

2 Feb 2026

Canada’s ambitions in lithium are increasingly centred on refining rather than extraction, as companies and policymakers target a key bottleneck in global battery supply chains.

Mangrove Lithium, part of Mangrove Water Technologies, has secured a structured financing package of up to $85mn to expand its refining operations. The funding is staged, with capital released only when the company meets defined technical and commercial milestones, reflecting caution in a volatile lithium market.

As sales of electric vehicles rise, refining has emerged as one of the most constrained parts of the battery value chain. Canada produces lithium, but much of it is still sent overseas for processing, adding cost, emissions and geopolitical exposure. Mangrove’s expansion is aimed at retaining more of that value domestically.

The financing combines public and private capital. Investors include BMW i Ventures and Breakthrough Energy Ventures, whose participation signals confidence that lower-emission refining technologies can be scaled commercially. It also reflects growing interest from automakers and investors in securing cleaner and more resilient sources of battery materials.

Rather than constructing a single large refinery, Mangrove is developing modular refining units at its site in British Columbia. Capacity can be added incrementally, reducing upfront risk and allowing the company to respond to swings in lithium prices and changes in customer demand. For manufacturers seeking long-term supply contracts, such flexibility has become increasingly attractive.

Government policy is reinforcing the shift. Federal measures such as the Clean Technology Manufacturing Investment Tax Credit and support from the Canada Growth Fund are designed to encourage domestic industrial capacity with lower emissions. Refining lithium in Canada using cleaner processes can help downstream manufacturers meet stricter environmental standards while limiting reliance on foreign processing hubs.

Challenges remain. Scaling new refining technologies is complex, competition in the sector is intensifying and secure access to raw lithium feedstock will be essential. Even so, the direction of travel is clear.

Canada’s lithium strategy is moving beyond mining alone. With capital and policy increasingly aligned behind refining, the country is positioning itself to play a broader role in the battery value chain, a shift that could shape its clean energy and industrial future.