Ottawa is weighing into the processing of critical minerals with a $5-million investment in Electra Battery Materials’ cobalt refinery in Temiskaming, the first dedicated plant of its kind in North America.
The funding will go toward a restart of a construction project that was mothballed in 2023 and for other preparatory technical and processing work.
In an interview with Northern Ontario Business, Electra CEO Trent Mell called today’s funding announcement “great news, but it is only a first step.”
Five million dollars “moves the needle,” he said, but construction won’t resume until they have a full funding package in place. A few more funders, both in government and the private sector, need to come forward to get the refinery project across the completion finish line.
Toronto-based Electra is short the US$60 million ($80.7 million) it needs to finish construction and start supplying the North American electric vehicle sector.
This is the second investment in the refinery project. Ottawa contributed a $5-million loan in 2020.
“The Government of Canada is stepping up to support innovation and the green economy in Northern Ontario,” said Nickel MPP Marc Serré in a news release. “This strategic investment will fuel economic growth, create jobs, and stimulate the regional economy.”
Electra is part of a wider ‘on-shoring’ movement to create a domestic mines-to-electric vehicle assembly plant supply chain when it comes to critical mineral processing. China dominates the global metals processing production space, a capability that Washington and Ottawa want to replicate at home.
“This is not just a Northern Ontario story,” said Mell. “It’s also a North American geopolitical story.”
Electra has poured millions into the former Yukon refinery between Temiskaming Shores and the town of Cobalt.
The original footprint of the building has been refurbished and recommissioned for a black mass recycling demonstration plant. Additional buildings have been constructed to delve into nickel processing down the road to create a critical minerals industrial park.
After a forgettable 2023, Mell is hopeful 2024 will be a turning point for the company and more project funding will arrive in the months ahead.
Electra weathered some severe headwinds last year.
Facing a cash crunch, inflationary pressures, supply chain issues and tough equity markets, Electra halted construction at the refinery site, sending construction crews home and laying off staff.
Mell can’t place a date on when construction will resume and when commercial production will start. He’s aiming for some time in 2025.
“When I get my money. How’s that?” said Mell, laughing. “It starts with when Electra will be fully funded.”
He expects the project funding will be split between Ontario, Canadian and U.S. funding agencies, keen on supporting critical mineral infrastructure development, and the private sector in the form of battery and original equipment manufacturers and metal traders. A strategic investor would be welcomed, he said.
“We can’t get ahead of ourselves,” said Mell. “We got hit pretty hard, like everyone else did, post-COVID. As a small cap company you can’t get ahead of your balance sheet so we’ll get fully funded and then we’ll hit the gas.”
When Electra makes a decision to restart, a minimum 15 months of construction activity lies ahead. Ahead of that will be three months of procurement and recruiting to get supplies and staff in place.
“How it all rolls together is hard to say; 18 months or longer is a good start.
“It’s about when we get the money in and how quickly we can reload.”
Once the refinery is running, there will be 55 to 60 positions filled, double that with the number of indirect jobs.
He sees their refinery being a huge economic contributor to the area.
“What remains is a big construction job. I see 120 people on that property for a little over a year installing the equipment and doing a lot of piping and electrical work.”
Mell said they’ll be adding skilled trades from Temiskaming Shores, North Bay, Sudbury and Timmins, while looking for a solution to house those contractors coming from further afield.
“But these are challenges I welcome. Getting back to what we wanted to do is pretty exciting.”
Today’s announcement comes on the heels of a $4-million federal investment earlier this week to Ucore Rare Metals for a Kingston facility that specializes in rare earth element separation technology.
Ottawa’s focus seems to be quickly pivoting from funding the downstream electric vehicle manufacturers and carmakers, such Volkswagen and Stellantis, in southern Ontario to now funding the upstream processors.
Mell said government has some catching up to do since 37 battery cell manufacturing plants have been announced across North America.They’ll need a few more refiners like Electra to feed those plants and produce the specialized battery-grade material that’s needed.
But Mell said they’re capable of expanding and boosting cobalt production. By their third year of operation, they have plans to increase from 5,000 tonnes to 6,500.
Electra already has a major customer waiting in the wings.
LG Energy Solution of South Korea, one of the world’s largest electric vehicle battery makers, has a five-year agreement to scoop up 80 per cent of their cobalt production when production starts. Mell said there will be no problem selling the remainder.
Electra has also been approached by the Quebec government to establish a second refinery in the port city of Becancour.
“I do feel optimistic that the time is now.” Mell said if Electra is successful with those two plants, expansion to the U.S. is a possibility.
The company has been fine-tuning its proprietary technology to recover critical metals such as copper, lithium, nickel, cobalt and manganese from shredded battery materials.
Last year, Electra struck an agreement with the Three Fires Group, a regional Indigenous economic development entity, to source future raw materials from the battery cell plants in southern Ontario. The valuable metals would be shipped north to Temiskaming to convert into a valuable precursor metals to sell back to the market.
On the cobalt production side, Electra will be sourcing a concentrated cobalt hydroxide from the Democratic Republic of Congo (DRC). While the African country has a less-than-stellar reputation for environmental and human rights abuses in mining, Mell said they are sourcing material from the largest and most responsible operators in-country, most notably companies like Glencore.
The DRC, he said, is easily the global leader in cobalt production in volume, quality and grade, followed by Indonesia. There are sources of cobalt supply in North America, but bringing those into production is at least five years out.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets climbed to their best week of the year.
“It’s been almost a complete opposite or retracement of what we saw last week,” said Philip Petursson, chief investment strategist at IG Wealth Management.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
While last week saw a “healthy” pullback on weaker economic data, this week investors appeared to be buying the dip and hoping the central bank “comes to the rescue,” said Petursson.
Next week, the U.S. Federal Reserve is widely expected to cut its key interest rate for the first time in several years after it significantly hiked it to fight inflation.
But the magnitude of that first cut has been the subject of debate, and the market appears split on whether the cut will be a quarter of a percentage point or a larger half-point reduction.
Petursson thinks it’s clear the smaller cut is coming. Economic data recently hasn’t been great, but it hasn’t been that bad either, he said — and inflation may have come down significantly, but it’s not defeated just yet.
“I think they’re going to be very steady,” he said, with one small cut at each of their three decisions scheduled for the rest of 2024, and more into 2025.
“I don’t think there’s a sense of urgency on the part of the Fed that they have to do something immediately.
A larger cut could also send the wrong message to the markets, added Petursson: that the Fed made a mistake in waiting this long to cut, or that it’s seeing concerning signs in the economy.
It would also be “counter to what they’ve signaled,” he said.
More important than the cut — other than the new tone it sets — will be what Fed chair Jerome Powell has to say, according to Petursson.
“That’s going to be more important than the size of the cut itself,” he said.
In Canada, where the central bank has already cut three times, Petursson expects two more before the year is through.
“Here, the labour situation is worse than what we see in the United States,” he said.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
