Electra signs IRA-compliant cobalt supply deal

North America’s first battery grade cobalt sulphate refinery strikes key mineral supply deal

Electra signs IRA-compliant cobalt supply deal
Electra will source cobalt from Eurasian Resources Group

Canadian metals firm Electra Battery Materials, operators of North America's first cobalt sulphate refinery, has signed a deal with Luxembourg-based Eurasian Resources Group (ERG) to source cobalt for its North American battery supply chain.

ERG will deliver 3,000t/yr of cobalt to Electra’s refinery north of Toronto for a duration of three years beginning in 2026. The cobalt supplied will be compliant with the US Inflation Reduction Act, which entitles any batteries made with it to up to $7,500 in purchase incentives for US customers.

"[Electra] signed a binding letter of intent for long-term supply of ERG’s cobalt hydroxide to North America’s first battery grade cobalt sulphate refinery. The agreement, effective 1 April 2024, supports efforts to onshore the battery supply chain and reduce reliance on foreign refiners," Electra says.

With this agreement, Electra says it has sufficient cobalt hydroxide feed material to meet all of the refinery’s annual capacity.

A North American manufacturing cluster is emerging in Ontario which aims to localise a supply chain for IRA-compliant EV batteries. Electra says it is now considering a second cobalt refinery to join projects backed by the likes of European OEM Stellantis and South Korean battery maker LG Energy Solutions.

“Electra’s Canadian refinery is uniquely positioned as North America’s first cobalt sulphate 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,” Electra CEO Trent Mell says.

The burgeoning North American battery supply chain is seen as key to wresting control of the global battery industry away from Chinese firms such as global leader Catl. To date, however, US automakers such as Tesla and Ford are still using Catl batteries due to their lower cost compared to domestically-produced batteries.

And while North America has been building out battery assembly capacity and mining capacity, the midstream portion of the supply chain is still dominated by China.

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

Currently, only around 20pc of the world’s nickel and cobalt supply will meet requirements laid down under the IRA by 2030, according to consultancy Benchmark Mineral Intelligence.

This could mean EVs made with nickel manganese cobalt (NCM) chemistry batteries could risk missing out on subsidies, ironically potentially tilting the balance towards the competing lithium iron phosphate (LFP) chemistry still dominated by China.

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