Pulp Mill to Trial New Lithium Processing Technique Using Crude Tall Oil

A Pulp Mill Byproduct Steps Into the Critical Minerals Supply Chain

There is a substance produced at nearly every kraft pulp mill in Canada that has long been treated as a low-value residual. Crude tall oil — the dark, soap-like material skimmed from black liquor during the kraft cooking process — has modest commercial applications today, mostly as a feedstock for biofuels and specialty chemicals. But a pilot project launching at Thunder Bay Pulp and Paper in Northwestern Ontario could reframe what tall oil is worth, and in doing so, offer the broader pulp industry a new lens on its own byproduct streams.

The mill is partnering with Rock Tech Lithium to trial a technique that uses crude tall oil as a processing agent in lithium extraction from rock. The Ontario government is backing the project with $262,500 in funding, and the pilot is expected to run for several months before results are assessed.

It is an experimental program with no guarantee of commercial success. But the concept it tests — that a pulp mill byproduct could meaningfully slot into the critical minerals supply chain — is the kind of convergence the forestry sector has been searching for.

What Crude Tall Oil Is and Why It Matters Here

Crude tall oil (CTO) is an inevitable output of the kraft process. When wood chips are cooked in the white liquor digester, lignin and hemicellulose dissolve into the black liquor that is later burned for energy recovery. Before that combustion step, tall oil soaps are skimmed off and acidulated to produce CTO — a mixture of fatty acids, rosin acids, and neutral compounds.

Most mills either sell CTO at modest prices into commodity markets or use it internally as a supplemental fuel. Its energy value is real but unspectacular. Its chemical properties, however, are more interesting: the fatty and resin acid content gives CTO potential as a reagent or solvent aid in hydrometallurgical processes — the chemistry-intensive steps used to separate and purify metals from ore.

Rock Tech Lithium, which is advancing a lithium hydroxide refinery in Ontario as part of Canada’s electric vehicle battery supply chain buildout, is exploring whether CTO can play a functional role in the lithium extraction process. The specific mechanism is not yet public, but the hypothesis is that a mill residual could substitute for or supplement conventional reagents used in lithium processing — reducing input costs while creating a market-pull for what mills currently undervalue.

What the Thunder Bay Trial Actually Tests

The pilot at Thunder Bay Pulp and Paper is deliberately modest in scope. Several months of testing will determine whether the technique is chemically viable at meaningful scale, not whether it is ready for commercialization. This distinction matters for anyone watching from the mill operator or investor side: a positive result from this trial opens a development pathway, not a revenue line.

That said, the structure of the partnership is worth noting. Rock Tech Lithium brings the mineral processing expertise; Thunder Bay Pulp and Paper brings the feedstock and the operating infrastructure. Provincial funding reduces the financial exposure for both parties during the validation phase. Associate Minister Kevin Holland, speaking to the project’s significance, called it “a win-win for northwestern Ontario,” pointing to the way it links diversifying “products from forestry biomass and mill residuals” to the momentum behind mining in the region.

The framing from government is deliberate. Ontario has been aggressively positioning its mining and critical minerals sector as a pillar of the provincial economy, and connecting that sector to forestry — which employs tens of thousands across the north — is politically and economically useful. The question the pilot must answer is whether the connection is technically durable, not just rhetorically appealing.

Mill Economics: What a Positive Result Would Mean

For pulp mill operators, the scenario worth modeling is straightforward. If crude tall oil can command pricing as a critical minerals processing input — rather than as a commodity biofuel feedstock or a boiler supplement — the revenue impact per tonne of CTO would be material. A kraft mill producing 500,000 air-dried tonnes of pulp per year generates significant volumes of tall oil soap as a matter of course. Upgrading even a portion of that output from commodity pricing to specialty reagent pricing would improve margin without changing the core production process at all.

The capital implications are also relatively contained compared to other diversification plays. Mills would not need to install lithium processing equipment. The value would be captured upstream — in the byproduct itself — with Rock Tech or a similar downstream partner handling the mineral extraction side. This is a supply relationship, not a manufacturing pivot.

That asymmetry makes the Thunder Bay pilot more broadly interesting than its modest funding level might suggest. If the chemistry works, the replication opportunity across kraft mills in Ontario, British Columbia, and Atlantic Canada is substantial. CTO is not a Thunder Bay-specific resource. It comes off the digester at Kamloops, at Edmundston, at Dryden. Any mill that produces it becomes a potential participant in the model.

The Larger Convergence Playing Out

This trial arrives at a moment when the forestry and mining sectors in Canada are finding unexpected common ground. Biomass, mill residuals, forest-derived chemicals, and even harvesting infrastructure are all being examined for roles in the energy transition supply chain. Tall oil to biodiesel has been a known pathway for years. Tall oil to lithium processing is newer territory.

The pilot’s outcome will take months to know. But the question it asks — whether a kraft mill byproduct can earn its way into the critical minerals economy — is one that production managers, mill owners, and forest industry investors should be tracking closely. The answer, if positive, would be a quiet redefinition of what a pulp mill actually produces.