STORY MINERALSNORTH AMERICA’S FIRST BATTERY-GRADE COBALT REFINERYElectra Battery Materials leads the way with their Timiskaming Shores assetBy Don NormanWorkers at Glencore’s Mutanda copper/cobalt operation in the Democratic Republic of CongoElectra Battery Materials (formerly First Cobalt Corp. –the company officially changed names in November 2021, but to avoid confusion, the name Electra is used throughout this article) is on track to become the only North American producer of refined cobalt for the North American EV market. Understanding how the company got to that position requires a little background.Cobalt is being discussed in this edition of the Ontario Prospector because it falls into the category of “critical mineral” as outlined recently by the Government of Ontario. And on the surface, it has a lot of similarities with other minerals on that list. Much like niobium (see page 16), the vast majority of cobalt is produced in one country –in this case, the Democratic Republic of Congo (DRC). The country produces upwards of 100,000 tonnes of cobalt a year. For some perspective, the secondlargest producer of cobalt in the world is Russia, who produces just over 6,000 tonnes a year. Canada produces roughly 3,000 tonnes a year.Cobalt calcite mineral from Congo.Cobalt coming from the DRC has been criticized for carrying ethical baggage that makes its usage controversial. In an October 2020 article posted in Council on Foreign Relations, the author, Professor Dorothée Baumann-Pauly from Geneva University’s School for Economics and Management, states, “15 to 30 per cent of the Congolese cobalt is produced by artisanal and small-scale mining (ASM)… Human rights risks are particularly high in artisanal mines in the DRC. Child labor, fatal accidents, and violent clashes between artisanal miners and security personnel of large mining firms are recurrent.”These issues, combined with the mineral’s importance to the EV battery manufacturing sector and the predicted growth of that sector, were driving home the importance of a reliable, ethical, domestic source of cobalt in coming years. Enter Electra (then First Cobalt) –a company that was describing itself as, “a leading non-DRC cobalt company.”In June 2017, Electra bought a 50 per cent share in a cobalt refinery that had been owned by Cobalt One Limited. Shortly thereafter, it made a proposal to Cobalt One shareholders that would see Electra acquire 100 per cent of Cobalt One shares and full ownership of their Timiskaming refinery. The proposal was well received. In a release announcing the merger, then-Cobalt One Executive Director Jason Bontempo said he was pleased with the proposal. “This proposal represents an attractive opportunity for Cobalt One to expand and allow shareholders to benefit from being part of a larger company that is expected to have greater liquidity and access to capital from two of the world’s leading capital markets,” he said. “Cobalt One shareholders would have a meaningful position in the merged company.” complements our Canadian Cobalt Camp properties, offering upside potential for shareholders of both companies,” said Trent Mell, Electra’s President and CEO, in a statement. “We view the refinery as a strategic asset as it is the only permitted cobalt refinery in North America capable of producing battery materials.”The purchase of US Cobalt was completed several months later. The Iron Creek Cobalt Camp that came with the purchase reduced the importance of the Canadian Cobalt Camp to the company. Subsequent corporateA little less than a year later, Electra was taking steps to further entrench its position in the North American cobalt market with the friendly takeover of US Cobalt, an exploration company with key assets in Idaho and Utah. “We foresee a shortage of cobalt over the next five years, yet there are few companies doing significant work to identify new sources of supply. This transaction creates a larger platform to discover and develop cobalt projects for the growing electric vehicle market by combining highquality North American assets in two of the best cobalt jurisdictions outside the DRC. US Cobalt’s Idaho project communications would refer to Iron Creek as their “flagship project.”With the combined assets of their new acquisitions, Electra was able to dream a little bigger. The first item on the list was to reboot the refinery it had just purchased. In April 2018, Electra launched a study of the refinery intended to help the company estimate the capital requirements for such an endeavour. On October 10, 2018, the company released the results of the re-start study. The capital cost of the restart was estimated at US$25.7M (including a 30 per cent contingency), and a separate permitting review concluded that a restart would be possible within 18 months of selecting a feedstock.Interestingly, it was in the October 10 announcement that Electra (at least publicly) began to cozy up to the idea of using DRC cobalt hydroxide as feedstock for the plant. However, the company stipulated that the DRC cobalt would be ethically sourced.In November 2018, Electra began testing various sources of feed for the refinery, including cobalt hydroxide, cobalt concentrate from mining operations and recycled battery materials.By this time, the price of cobalt was in freefall. The value of the mineral had dropped nearly 40 per cent since reaching 10-year highs in March 2018. The price finally bottomed out in mid-2019 after losing roughly 70 per cent of its value. Given the economic climate, Electra took a break from drilling at their cobalt properties and focussed on the nuts and bolts of getting the refinery up and running. And as this process played out, it would become clear Electra’s Canadian deposits wouldn’t be part of that process.“For the Canadian deposits that we had, there’s no short-or medium-term plans for those to be part of the refinery,” explains Ryan Snyder, Electra’s CFO in an interview with the Ontario Prospector. “When we canvassed the world for the right feed for the refinery, [it became clear] the DRC is the best source of cobalt to feed the electric vehicle market today.” With the Iron Creek deposit being further along in terms of providing a viable feed, the company now sees the refinery in Ontario as their number one asset and the Idaho deposit as their number two asset. But Electra’s Canadian deposits have, at least for now, fallen to the wayside. “Truthfully, the Ontario properties had some interesting intercepts but were going to be very long-term assets for us. There was nothing that could be done to bring it into production in the near-term.”Some of that has to do with the chemistry of the Canadian deposits. “In the Canadian deposits that we know of, cobalt is associated with arsenic,” said Mell in an October 2021 interview with Kitco News posted on the Electra website. “With processing, you can get rid of it, that’s not really a big issue, but it’s permitting. It’s just one extra permitting issue that we’re not going to have to deal with initially with our feed from the DRC, nor with our recycling, nor with our Idaho project.”In that same Kitco interview, Mell acknowledged that the situation had changed significantly since his company purchased the Cobalt One refinery back in 2017. “Initially when we got into our refinery strategy, it had geopolitical undertones with the Trump administration declaring it a critical mineral.” Since that time, COVID-19 affected supply chains worldwide, and supplying the growing EV car industry became more critical than securing and growing a domestic source of the mineral. That being said, Mell thinks Iron Creek could supply 40-50 per cent of North American demand for cobalt if the company were to develop a couple of mines on the property.However, it was because refined cobalt was needed immediately that DRC-sourced feedstock entered the conversation. “It’s a big open pit deposit. It’s high grade. It’s high tonnage,” Mell told Kitco. “There aren’t many places in the world you can get those kinds of concentrations.”Still, questions remain surrounding the ethics of a DRC-sourced feed stock.Aerial view of Electra’s refinery on the shores of Lake Temiskaming.(Photo: Electra Battery Materials).“From our company’s perspective, we obviously are very focused on ESG (Environmental, Social and Governance) human rights, and sustainable production of cobalt,” explains Snyder. “Once we determined that you have to go to the DRC to source this stuff just to be in the market today, it was an intentional decision that we would only deal with the major players.” There are three “major players” in terms of cobalt in the DRC: today, China Moly, ERG and Glencore. These large, commercialscale mining companies produce ESG public reporting and have their human rights and supply chains audited. “We were never going to buy from a mid-tier, smaller scale or artisanal producer in the DRC.” Electra established five-year deals with Glencore and China Moly, both of whom are respected mining companies with good track records in terms of ESG.The refinery is expected to begin production of battery-grade cobalt sulfate in Q4 2022, with an annual production target of 5,000 tonnes of cobalt, subsequently increasing to nameplate capacity of 6,500 per year. Electra expects to have a commercial line of recycled products some time in 2023.While it is unfortunate that the Ontario cobalt resources next door to Electra’s refinery will sit dormant for now, the facility remains a feather in the cap for the province. And having an asset nearby could open doors to future cobalt developments within Ontario. “Having a processing centre closer by would make any kind of new discovery more viable,” explains Snyder.
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