Finland’s export-credit agency Finnvera has opened a potential financing route for Avalon Advanced Materials’ Lake Superior lithium-processing facility in Thunder Bay, Ontario, after issuing a non-binding letter of interest linked to an estimated €100 million of equipment and services from Metso. The development could give Avalon access to as much as approximately €85 million in buyer-credit support for eligible Finnish exports, although the financing remains subject to further due diligence, approvals and the completion of a commercial agreement between Avalon and Metso.
Finnvera evaluates Finnish export content
The letter of interest followed an application submitted by Finland-based Metso, which is expected to provide processing and refining technology for the planned lithium refinery under a future supply contract. Finnvera has determined that the proposed procurement package contains enough Finnish content to move into a more detailed financing assessment. Under its standard export-credit framework, the agency can generally support up to 85 per cent of eligible Finnish goods and services.
On a €100 million equipment package, that could translate into roughly €85 million of potential buyer-credit financing. Depending on the eventual structure, additional eligible local costs, guarantee premiums and capitalised construction interest could also be considered. The financing could be structured through a buyer-credit guarantee supporting a commercial bank that arranges the facility. Finnish Export Credit, Finnvera’s financing arm, could potentially participate directly as a lender. No arranging bank has been selected. The ultimate credit amount, maturity, repayment schedule, covenants and security arrangements remain subject to negotiations and financial structuring.
Indicative support is not yet project finance
For Avalon, the distinction between a letter of interest and committed financing is critical. Finnvera’s indication does not constitute a binding funding commitment. Before any export-credit facility can be finalised, the project must pass technical and environmental due diligence, satisfy credit requirements and fit within Finnvera’s internal exposure limits.
Avalon will also need to execute the underlying commercial agreement with Metso before the proposed equipment financing can progress toward a definitive structure. The potential Finnish financing therefore represents one component of a much larger funding package rather than a solution to the entire capital requirement.
Thunder Bay refinery requires substantial capital
Avalon’s 2024 preliminary economic assessment envisaged a lithium conversion facility capable of producing approximately 30,000 tonnes a year of battery-grade lithium hydroxide monohydrate. The study estimated initial capital expenditure at about C$1.2 billion, with total capital requirements over the life of the project reaching approximately C$1.3 billion.
That scale highlights the limited but potentially important role of the proposed Finnvera-backed package. Even if the full €85 million of eligible export credit were ultimately secured, it would finance only a fraction of the overall development. The project’s preliminary economics were substantial. The assessment calculated an after-tax net present value of approximately C$4.1 billion and an internal rate of return of 48 per cent. Those figures were based partly on a long-term lithium hydroxide price assumption of around US$26,000 per tonne, meaning the projected returns remain sensitive to lithium prices, spodumene feedstock costs, plant performance and the availability of investment tax credits.
Metso technology could form a financed equipment package
The proposed Metso package is expected to cover key parts of the refinery’s processing technology. The planned flowsheet includes calcination, pressure leaching, conversion, ion-exchange purification and crystallisation. Putting long-life processing equipment into an export-credit financing structure could help Avalon address one of the challenges facing large industrial projects: matching the financing term of major equipment with the long operating life of the facility.
Instead of relying entirely on parent-company equity to fund equipment purchases, an export-credit-backed buyer loan could provide longer-tenor debt against specific Finnish-supplied technology. That does not eliminate project risk, but it can diversify Avalon’s funding sources and potentially improve the overall capital structure.
Avalon still needs a broader financing package
The company intends to combine prospective Finnish export-credit support with a wider group of financing sources. These could include Canadian and US government programmes, commercial project debt, strategic equity investments and customer or offtake financing.
The approach reflects the scale of the Thunder Bay development. Funding for infrastructure, contingency requirements, working capital and equipment outside the Metso package would still have to be secured separately. The proposed Finnvera route therefore should be viewed as a building block rather than evidence that the entire lithium refinery has reached financial close.
Lithium processing moves closer to financing stage
The significance of the letter lies in its ability to move a defined part of Avalon’s procurement programme into a recognised government-backed export-credit channel. Government-supported financing can be particularly valuable for critical-minerals projects because lenders and strategic investors are increasingly assessing not only project economics but also supply-chain security, domestic processing capacity and the geographic diversification of battery-material production.
Avalon’s Thunder Bay project is intended to add lithium conversion capacity in North America, while Metso would provide Finnish processing technology. The potential financing therefore links Canadian lithium processing with European industrial expertise and export-credit support. The next major milestone will be converting the indicative €100 million Metso procurement package into a signed commercial contract and subsequently establishing a bankable buyer-credit facility with an identified lender.
Until those steps are completed, the proposed €85 million Finnvera financing route remains conditional. Its importance is nevertheless clear: it gives Avalon a potential source of long-term capital for critical processing equipment at a time when securing diversified financing has become as important to lithium projects as securing the underlying mineral supply.
