North America-focused Elevra Lithium secured a price-floor structure in a deal to supply a new processing facility in Canada, as western countries seek to bolster their critical-mineral supply chains.

The Sydney-listed company will supply spodumene concentrate from its project in Québec to Mangrove Lithium’s planned conversion plant, according to a statement on Friday. The agreement provides a price floor set above the expected cost of production, but no ceiling, it said, without disclosing the sum.

Countries around the world have been stepping up their efforts in recent years to develop lithium-refining capacity in a bid to reduce their reliance on production in China. There’s rising global demand for the commodity given its use in energy-storage systems, although prices have been very volatile.

The critical-minerals industry, including lithium miners, has been calling for mechanisms such as floor prices to ensure the long-term viability of their mines. In February, Australia’s PLS Group signed a spodumene concentrate offtake agreement with Canmax Technologies that had a floor.

“We do expect this type of pricing structure to be the standard moving forward,” Annie Liu, Mangrove’s chief commercial and strategy officer, said in an interview. “Hard-rock assets are in demand for the foreseeable near future, and it does take a long time to develop a brand new asset.”

Elevra will supply all of the feedstock needed for Mangrove’s 20 000 ton-a-year lithium carbonate-equivalent conversion facility, according to Liu. The project — which is still subject to a final investment decision — is expected to get further support from Export Development Canada and the Canada Growth Fund, alongside other potential funders, she added.

“The trend is very clear that all regions would like to preserve and secure their national security on critical minerals,” Liu said. Downstream processing is the key step in building an “offshore-from-China” supply chain, she said.

Elevra Lithium shares, which have more than doubled over the past 12 months, rose as much as 6.1% on Friday.