Electra Battery Materials Corp. ELBM-X has agreed to supply electric-car battery manufacturer LG Energy Solution Ltd. (LGES) with cobalt from an Ontario cobalt refinery that it hopes will be operational next year.
Toronto-based Electra plans to supply 7,000 tonnes of battery-grade cobalt from 2023 to 2025 to LGES. The South Korean company is the world’s second-biggest battery maker and counts Tesla TSLA-Q, Volkswagen VWAGY and Stellantis NV STLA-N among its customers.
The announcement from Electra comes as Canada starts to establish a domestic EV metals supply chain to feed into the industry in an attempt to challenge Chinese dominance. The Asian superpower controls about 80 per cent of the refining of metals that feed into the EV supply chain, including lithium, cobalt, graphite and nickel.
LGES earlier this year said it planned alongside automaker Stellantis to build a zero-emissions vehicle (ZEV) battery plant in Windsor, Ont. The Ontario and federal governments have earmarked hundreds of millions of dollars toward the facility.
Both levels of government are investing in battery minerals because a consumer shift to battery-powered EVs is essential if the country is to meet its long-term promise to achieve net-zero carbon emissions by 2050.
Electra, which has already received $10-million in financial assistance from Ontario and Ottawa, is about halfway through a $100-million refurbishment of a shuttered cobalt refinery near the town of Cobalt in northeastern Ontario. The facility is expected to be North America’s first battery-grade cobalt refinery.
The refinery was scheduled to start production later this year, but the date has been pushed out until the spring of 2023, owing in part to problems with equipment quality and supply chain delays in obtaining electrical components.
The TSX Venture-traded company recently warned investors it is a “going concern” risk largely because it does not have any revenue yet.
Trent Mell, the chief executive officer of Electra, said in an interview that he’s confident the company will be able to raise the roughly $30-million needed to both complete work on the refinery, as well as for other projects over the next six months. He expects the funds would come from convertible debt, an equity raise or possibly attracting a strategic partner.
Mr. Mell said the contract with LG is worth about US$70-million in revenue over the three years and will account for about 60 per cent of its production.
Electra plans to process cobalt mined by Anglo-Swiss mining giant Glencore PLC in the Democratic Republic of Congo, as well as from other sources.
Shares in Electra rose by 12 per cent on the TSX Venture Exchange on Thursday to close at $4.43 apiece.
While Ontario is making inroads in the nascent sector, Quebec is by far the province with the most developed battery-metals industry. Privately held Nemaska Lithium Inc. is developing a lithium mine and processing plant in Bécancour, Que. which it hopes to have in production in 2025. The federal and Quebec governments also announced this year that they would provide an undisclosed amount of money to General Motors Co. and South Korea’s POSCO Chemical Co. Ltd. for the construction of a $400-million battery-parts plant in Bécancour. Brazilian mining giant Vale SA is also weighing the possibility of building a battery-grade nickel refinery in Quebec.
Niall McGee