Electra and Eurasian Resources Group Sign Cobalt Supply Agreement

3 April 2024

Electra Battery Materials Corporation and Eurasian Resources Group S.A.R.L. (“ERG”), a leading diversified natural resources group headquartered in Luxembourg, announced today that they have 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 April 1, 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 has sufficient cobalt hydroxide feed material to meet all of the refinery’s annual capacity
  • Cobalt will come from ERG’s Metalkol operation in the Democratic Republic of the Congo, 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, Quebec

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 U.S. and Canada.

“Partnering with a recognized leader in sustainable mining practices is essential for Electra to produce secure, clean, and ethically sourced battery materials,” said Electra’s CEO, Trent Mell. “Electra’s Canadian refinery is uniquely positioned as North America’s first cobalt sulfate refinery, with IRA-compliant feedstock to support growing EV demand. We are very proud to have ERG, one of the best cobalt hydroxide suppliers in the world, as a partner.”

“ERG is a responsible global player who supports the green energy transition. Electra was one of the first companies to achieve localisation of the upstream supply chain, supporting the industry’s move towards an entirely integrated battery supply model and putting battery metals at the core of industry's related efforts,” said Benedikt Sobotka, ERG’s CEO and Co-Chair of the Global Battery Alliance. “Supplying ethically produced cobalt hydroxide to Electra meets our values and supports North America’s cobalt demand, as well as the region’s rapidly expanding battery supply chain.”

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 DRC represents approximately 75% of global cobalt production and 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, Quebec 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.