Lithium chemicals giant Livent Corp, formerly FMC Corp, said in a statement Monday it would resume its arbitration with the junior lithium project developer soon after Nemaska announced it had cancelled its multi-year supply agreement with Livent for product produced from the Whabouchi mine and Shwanigan electrochemical plant, in Quebec.

Livent argued Nemaska had no right to cancel the offtake agreement and said it would "enforce its rights" and resume its arbitration.

Under the supply agreement, Nemaska was supposed to start supplying lithium carbonate to Livent from April 1 this year, at a rate of 8,000t/y, or 28,000t over the contract term.

Nemaska and Livent have been locked in negotiations to revise the schedule for the supply of lithium carbonate, among other agreements. Livent previously filed arbitration but suspended it during the negotiation period.

Nemaska said Livent had advised that it "might have no option but to terminate the supply agreement and repay Livent the US$10 million payment, plus a similar amount as a termination fee".

"Despite good faith negotiations, the corporation was unable to reach a mutually satisfactory outcome with Livent," Nemaska said.

This is the second setback for Nemaska, which last week announced it would need a further C$375 million to complete its Whabouchi mine and Shwanigan plant. Nemaska initially set a budget of C$874.4-million for the project.

Nemaska's Whabouchi 2018 feasibility plans entail 7Mt of spodumene concentrate, which will be converted into about 770,000t of battery-grade lithium hydroxide and about 361,000t of battery-grade lithium carbonate, which equates to about 213,000t/y of concentrate being converted to about 23,000t/y battery-grade lithium hydroxide and 11,000t/y of lithium carbonate.

The stock (TSX:NMX) regained some of its 15.63% of intra-day losses in Toronto Tuesday to trade 3.13% or C1c lower in the early afternoon at 31c, capitalising it at $258.51 million.