Toronto-based Electra Battery Materials Corporation (NASDAQ: ELBM) (TSXV: ELBM) expanded its supply agreement of locally sourced cobalt with South Korean battery maker LG Energy Solution (KRX: 373220) to include 19,000 tonnes of battery grade cobalt over five years beginning in 2025.
The company said on Monday that the material would be supplied from the only cobalt sulfate refinery in North America.
The supply will begin with 3,000 tonnes in 2025, followed by an additional 4,000 tonnes each year until 2029. The pricing will be determined based on an agreed-upon mechanism. Previously, the initial agreement between Electra and LGES involved the supply of 7,000 tonnes of contained cobalt in a cobalt sulfate product over a three-year period, starting from the current year.
“LG Energy Solution continues to strengthen its position as a global leader in the electric vehicle supply chain through its investments in Ontario and active collaboration with Canadian companies developing critical minerals and battery materials,” said Trent Mell, CEO of Electra.
Electra has established a low-carbon hydrometallurgical refinery complex in Temiskaming Shores, close to the Sudbury Nickel Basin. The refinery is presently being constructed and is concurrently conducting a plant-scale black mass recycling trial.
Public policy and increasing adoption of electric vehicles (EV) are hastening the growth of a refining and battery recycling system in North America. The U.S. Inflation Reduction Act highlights the significance of establishing a local EV battery supply chain by extending a $7,500 tax credit for vehicles that do not use critical minerals sourced from China and Russia.
China is accountable for 71 per cent of refined cobalt, 76 per cent of refined nickel, and 93 per cent of refined manganese used in electric vehicle (EV) batteries, according to research by business intelligence firm for mining and fertilizer industries, CRU.
Trial aims to recovery valuable elements
This trial aims to recover valuable elements, such as lithium, nickel, cobalt, manganese and graphite, from expired lithium-ion batteries. So far, Electra’s trial outcomes have not only matched but even surpassed the results achieved in laboratory settings previously.
The company foresees the commercialization of its black mass recycling capabilities in 2024, subject to the completion of funding commitments.
Once fully operational, Electra’s battery materials park has the potential to produce enough cobalt sulfate to meet the requirements of approximately 1.5 million electric vehicles each year. Additionally, it will have the capacity to process 2,500 tonnes of black mass materials annually.
However, the construction of Electra’s cobalt refinery is still in progress, and the company is actively seeking additional capital from various sources, including government and strategic investors, to complete the construction and final commissioning of the refinery. To support its plans for a 2,500 tonne battery black mass refining operation, Electra is currently conducting a brokered private placement and securing a strategic investment from Three Fires. These steps will help prioritize and advance its refining operations for battery black mass.
Shares of Electra Battery Materials rose 21.8 per cent to $1.23 on the Monday on the Toronto Stock Exchange.
Canada ranks sixth in global cobalt production
Cobalt is a versatile metal with various valuable applications. It possesses properties of hardness, lustrous appearance and a silver-grey color. Its primary use lies in serving as a cathode material in lithium-ion batteries and other battery types.
Cobalt is also used to create powerful magnets, cutting tools, and high-strength alloys that are essential in the aeronautical, energy and defense industries. Additionally, cobalt compounds have a rich history of being utilized as pigments for pottery, glass, paints and other artistic media, dating back centuries. This metal’s wide-ranging properties and applications make it a vital element in numerous modern industries and historical artistic endeavours.
The world’s largest store of cobalt is in the Democratic Republic of Congo (DRC), accounting for 73 per cent of world production. The DRC is known for its negative human rights record. Comparatively, Canada ranks sixth in the world for cobalt production, contributing only 2 per cent of the global total.
In 2021, Canada’s cobalt production surpassed 3,800 tonnes, with 36 per cent of this output originating from Newfoundland and Labrador, according to the government of Canada.
The remaining cobalt was sourced from the provinces of Ontario, Manitoba and Quebec. Canada’s cobalt and cobalt product exports held a significant value of $562.4 million during the same year. All of Canada’s cobalt production at present is derived as a secondary product of nickel mining. This indicates that cobalt is obtained as a byproduct while extracting nickel from mining operations in the country.
Global commodities trader and minerals miner, Glencore Plc (LSE: GLEN) tops the lists of companies operating in the Congo, delivering cobalt. Also, in 2022 Freeport-McMoRan (NYSE: FCX) sold its 100 per cent stake in Kisanfu, a copper and cobalt exploration project located near Tenke, DRC to Chinese conglomerate CMOC Group Limited. Additionally, Toronto-based Sherritt International (TSX: S) shares the Cuban Moa Joint Venture with General Nickel Company S.A.