Electra Battery Materials Corporation and Eurasian Resources Group S.A.R.L. (ERG), a diversified natural resources group headquartered in Luxembourg, signed a binding letter of intent for long-term supply of ERG’s cobalt hydroxide to North America’s first battery-grade cobalt sulfate refinery. The agreement, effective 1 April 2024, supports efforts to onshore the battery supply chain and reduce reliance on foreign refiners.

Starting from 2026, under the three-year supply agreement, ERG will deliver 3,000 tonnes per annum of IRA-compliant cobalt to Electra’s refinery north of Toronto. With this agreement, Electra will have sufficient cobalt hydroxide feed material to meet all of the refinery’s annual capacity.

The cobalt will come from ERG’s Metalkol operation in the Democratic Republic of the Congo (DRC), one of the largest cobalt hydroxide facilities globally. Further collaboration is under consideration for Electra’s plans to build a second cobalt refinery in Bécancour, Québec.

Under the United States Inflation Reduction Act (IRA), electric vehicles containing critical minerals sourced from Foreign Entities of Concern will not qualify for the US$7,500 electric vehicle credit starting in 2025. These and other incentives are intended to support the strategic imperative of establishing a domestic EV battery supply chain in the US and Canada.

ERG’s cobalt hydroxide is an intermediate product from mining operations and is the preferred feedstock for refining a battery-grade cobalt sulfate product, the partners said.

The DRC represents approximately 75% of global cobalt production; approximately 90% of this cobalt is destined for EV batteries. Most of this material is being refined in China, which controls roughly 80% of the cobalt chemicals market.

ERG’s cobalt has a low carbon footprint as it is produced from historic tailings and the electrical grid used across their facilities is primarily hydroelectric. ERG is a founding member of the Global Battery Alliance and the Metalkol facility is assured under the Responsible Minerals Assurance Process (RMAP), which was established to provide assurance to manufacturers that critical minerals were sourced from a responsible and ethical supply chain.

Electra previously announced a five-year offtake agreement with LG Energy Solution for up to 80% of production, and demand for the remaining production far exceeds production capacity. Electra and ERG are exploring further collaboration to de-risk the construction of another cobalt refinery in the Bécancour district.

Electra’s refinery complex, when completed, aims to be the first in North America to integrate the production of critical minerals, including cobalt sulfate and nickel sulfate, needed for the North American electric vehicle battery supply chain, and the processing of black mass material, designed to recover high value elements found in recycled lithium-ion batteries, including lithium, nickel, cobalt, manganese, graphite, and copper.

Throughout 2023, Electra operated a plant scale battery recycling trial at its refinery complex, processing more than 40 tonnes of black mass material and producing high-quality nickel, cobalt and lithium products.

Once fully commissioned, the refinery could produce sufficient cobalt for up to 1.5 million electric vehicles annually.

Electra’s low carbon hydrometallurgical refinery in Canada is permitted and has a current replacement value of approximately US$200 million. The company requires an additional US$60 million in order to complete construction. The cobalt project has been derisked through the delivery of most long lead equipment and by commissioning the legacy refinery operations for the black mass demonstration plant.

ERG is one of the world’s largest producers of cobalt and ferrochrome. It is also a large global supplier of copper and high-grade iron ore. In Eurasia, it is one of the major suppliers of alumina and is Kazakhstan’s only producer of high-grade aluminum.

In Africa, ERG mines and processes copper and cobalt ore and produces copper metal and cobalt hydroxide. Frontier is the cornerstone of the Group’s copper business.

ERG’s Metalkol, a major tailings reprocessing operation in the Democratic Republic of the Congo, has become one of the world’s largest producers of cobalt as well as a major producer of copper.

Metalkol

Metalkol Roan Tailings Reclamation (RTR) in the Kolwezi area of the DRC consists of two legacy tailings deposits hosting approximately 110 million tonnes of reserves (2019). In 2020, Metalkol reached full Phase 1 production capacity and completed Phase 2 construction, with the additional plant increasing its production. In 2021, Metalkol achieved its design capacity for cobalt production and exceeded budget production for both its products, producing 20,718 tonnes of cobalt and 94,807 tonnes of copper.

The Group has its own supply chain on the continent through its logistics company Sabot as well as development projects which are focused on other minerals and products across the African continent, including South Africa and Zimbabwe.