Avalon Advanced Materials Inc. is partnering with Finnish company Metso Corporation to develop the first lithium processing facility in Ontario.

The memorandum of understanding announced on Monday will see the two parties establish terms for developing a lithium hydroxide production facility in Thunder Bay, Ont., which will process lithium mineral concentrates for in-demand electric vehicle batteries.

The companies expect to reach an agreement by Sept. 1.

The completed plant will be the first vertically integrated lithium producer in Ontario, the companies said in a news release. It’s expected to create about 500 jobs across the Thunder Bay facility and upstream lithium project in Kenora, Ont.

Avalon president Zeeshan Syed said Metso’s “platform and technological solutions” in mineral development are a good match for Avalon’s vision for an integrated lithium supply chain in Ontario.

"We view Metso as an integral part of this rapidly growing sector, and a foundational partner in developing internationally best-in-class processing capabilities that are environmentally sustainable, allowing Avalon to meet the soaring demand for battery-grade lithium,” he said in a written statement.

The announcement came as Canadian businesses and governments angle for a bigger role in the growing market for electric vehicles.

Avalon said the plan fits with its business goals, and with the Ontario and federal government’s strategies for critical minerals, which aim to build up domestic supply chains for minerals required for the transition to a cleaner economy, particular zero-emissions vehicles.

"We're honoured to play a role in securing Canada's clean-energy future, and understand the important work that's still required across both the public and private sectors to deliver on the province of Ontario and Ottawa's stated goals," Syed said.