Electra Announces Federal Government Support for Completion of North America’s Only Cobalt Sulfate Refinery

Rhea-AI Summary

Electra Battery Materials (NASDAQ: ELBM) has received a Letter of Intent for $20 million in funding from the Canadian Federal Government to complete North America's first battery-grade cobalt refinery. The facility, located in Temiskaming Shores, will produce 6,500 tonnes of cobalt annually, supporting up to one million EVs production.

The project aims to reduce North America's dependence on China, which currently refines about 90% of the world's cobalt. LG Energy Solution has committed to purchasing up to 80% of the facility's future production, with strong buyer interest exceeding capacity for the remaining output.

The refinery is projected to have the lowest carbon footprint of its kind globally. Electra's future plans include:

• Operating a battery recycling demonstration plant
• Developing a battery recycling refinery
• Potential second cobalt sulfate facility in Bécancour, Quebec
• Plans for a North American nickel sulfate plant

Positive

• Secured $20M government funding LOI for refinery completion
• 80% of future production already committed to LG Energy Solution
• Strong buyer interest exceeding capacity for remaining production
• Strategic position as North America's first and only cobalt refinery
• Projected lowest carbon footprint among similar refineries globally

Negative

• LOI is non-binding with no guarantee of final funding approval
• Construction still incomplete and requires additional work
• Heavy dependence on single customer (80% committed to LG Energy)

Insights

Financial Analyst

The $20 million Letter of Intent from the Canadian government represents a potentially significant capital infusion for Electra's cobalt refinery project, especially meaningful for a company with only an $18.8 million market cap. While non-binding, the advanced stage of discussions after over a year of negotiations and ministerial-level endorsements suggest reasonable progression toward final agreement.

The strategic value proposition is compelling: North America's first battery-grade cobalt refinery positioned to break China's 90% dominance in global cobalt refining. The secured offtake agreement with LG Energy Solution for 80% of future production provides critical revenue visibility while excess demand for the remaining capacity indicates strong market validation.

However, several critical questions remain unanswered. The total capital required to complete the refinery isn't specified, making it unclear if $20 million would fully fund remaining construction. The lengthy negotiation period (over a year) and the two-month gap since the LOI was signed (January 27) without finalization suggests potential complications or additional requirements.

The project appears substantially de-risked from regulatory and commercial perspectives, with permits secured, infrastructure in place, most equipment on-site, and offtake agreements arranged. This significantly reduces execution risk compared to early-stage projects.

The strategic positioning as a domestic, non-FEOC (Foreign Entity of Concern) supplier of cobalt—a critical battery mineral—aligns perfectly with North American policy priorities regarding supply chain security, potentially creating additional partnership opportunities beyond this initial government support.

Supply Chain Strategist

Electra's cobalt refinery represents a critical strategic initiative to address what has been a glaring vulnerability in North America's clean technology supply chain. With 90% of global cobalt refining concentrated in China, this facility would establish the continent's first domestic source of battery-grade cobalt sulfate, significantly reducing geopolitical supply risks for North American EV manufacturers.

The 6,500 tonnes annual production capacity translates to supporting approximately one million electric vehicles yearly—roughly 8-10% of projected North American EV production by mid-decade. This creates a meaningful impact on regional supply chain resilience while remaining at a scale that appears achievable.

The LG Energy Solution offtake agreement for 80% of production provides exceptional demand certainty that typically eludes new materials processing facilities. Such commercial validation from one of the world's largest battery manufacturers significantly reduces market risk.

Particularly noteworthy is Electra's claim to develop the lowest carbon footprint cobalt refinery globally, suggesting potential premium pricing opportunities as automotive OEMs increasingly prioritize sustainability metrics throughout their supply chains. Their status as a non-FEOC supplier will become increasingly valuable as regulations like the Inflation Reduction Act and similar policies in Canada continue prioritizing domestic and allied nation sourcing.

The company's broader battery materials strategy—including battery recycling feasibility studies and potential nickel sulfate production—indicates an integrated approach to critical mineral processing that could create significant operational synergies and position them as a comprehensive battery materials supplier rather than a single-commodity processor.

(All amounts in $C unless otherwise specified)

TORONTO, March 21, 2025 (GLOBE NEWSWIRE) -- Electra Battery Materials Corporation (NASDAQ: ELBM; TSX-V: ELBM) (“Electra” or the “Company”) is pleased to announce receipt of a Letter of Intent ("LOI") for proposed funding of $20 million. The funding will support completion of construction and commissioning of North America’s first battery grade cobalt refinery which will enable domestic production of up to one million electric vehicles annually.

“We are grateful to be working with the Government of Canada. Today’s announcement underscores their commitment to advancing North American energy security and critical mineral independence,” said Electra CEO, Trent Mell. “Electra’s refining complex is a cornerstone of this collective effort, providing a strategically unique solution to strengthen and diversify the region’s critical minerals supply chain. By addressing domestic shortfalls and reducing reliance on China, where approximately 90% of the world’s cobalt is currently refined, we are fostering a more resilient, sustainable, and self-reliant future for North America.”

“LG Energy Solution will purchase up to 80% of our future production and buyer interest for the remainder far exceeds our capacity,” Mell continued. “With permits, infrastructure and buildings in place, most equipment on site, and negotiations with the Government of Canada reaching an advanced stage after more than a year of work, Electra intends to move swiftly to complete these discussions and resume construction of this strategic asset.”

The Honourable Anita Anand, Minister of Innovation, Science and Industry commented, “Canada has everything it takes to be a leading force in critical minerals processing, manufacturing and recycling. Critical minerals are essential to power a low-carbon economy. I am interested in seeing how this develops, as Electra’s proposal may positively impact Canada’s critical minerals processing in Canada.”

“Canada, with its abundance of critical mineral resources, is uniquely positioned to play an important role in the global energy transition. As the demand for critical minerals increases, along with the clean energy and technologies they enable, our high environmental social governance standards and the expertise of our workforce will be critical advantages in the low-carbon economy of the future. Electra’s project will provide Canada with a high-quality critical mineral input that will contribute to the net-zero economy and strengthen our mining industry,” said Marc G. Serré, Parliamentary Secretary to the Minister of Energy and Natural Resources.

“The Federal Government’s commitment to Northern Ontario, to its mining sector, and the important role that it will play in Canada’s transition to a clean and sustainable economy is very evident with today’s contribution,” said Anthony Rota, Member of Parliament for Nipissing-Timiskaming.

The LOI, which was agreed to January 27, 2025, was provided to the Company by the Federal Government and is non-binding. The LOI expresses an interest and intent to work towards completing a final term sheet but does not constitute a binding agreement. While discussions between the parties are ongoing, there is no guarantee or assurance that final agreements will be reached and/or funding will be provided to the Company.

The refinery project is located north of Toronto, in the town of Temiskaming Shores, and is projected to have the lowest carbon footprint of any refinery of its kind in the world.

With more than 90% of cobalt sulfate production in China, Electra will be one of the few providers of cobalt in the industry without any Foreign Entity of Concern involvement. Once fully commissioned, the facility will produce 6,500 tonnes of cobalt per year, which would support the production of up to 1 million EVs annually.

In addition to cobalt refining, Electra plans to produce other battery materials that will strengthen the resiliency of the North American supply chain. In 2023, the Company operated a plant-scale battery recycling demonstration plant at its refinery complex, recovering lithium, nickel, cobalt and other critical minerals from batteries. Electra has recently commenced feasibility level engineering study to build a battery recycling refinery adjacent to its cobalt refinery. The Company is also contemplating a second cobalt sulfate facility in Bécancour, Quebec and a strategically located North American nickel sulfate plant. “Our Temiskaming Shores refinery complex is the first step in Electra’s vision. We are building the right assets at the right time and are extremely well-positioned to leverage the refinery complex to grow along with the EV and battery markets,” said Mell.

About Electra Battery Materials

Electra is a processor of low-carbon, ethically-sourced battery materials. Currently focused on developing North America’s only cobalt sulfate refinery, Electra is executing a phased strategy to onshore the electric vehicle supply chain and provide a North American solution for EV battery materials refining. In addition to building North America’s only cobalt sulfate refinery, its strategy includes integrating black mass recycling, potential cobalt sulfate processing in Bécancour, Quebec, and exploring nickel sulfate production potential in North America. For more information, please visit www.ElectraBMC.com.

Contact

Heather Smiles
Vice President, Investor Relations & Corporate Development
Electra Battery Materials
info@ElectraBMC.com
1.416.900.3891

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Cautionary Note Regarding Forward-Looking Statements

This news release may contain forward-looking statements and forward-looking information (together, “forward-looking statements”) within the meaning of applicable securities laws and the United States Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, are forward-looking statements. Generally, forward-looking statements can be identified by the use of terminology such as “plans”, “expects”, “estimates”, “intends”, “anticipates”, “believes” or variations of such words, or statements that certain actions, events or results “may”, “could”, “would”, “might”, “occur” or “be achieved”. Forward-looking statements are based on certain assumptions, and involve risks, uncertainties and other factors that could cause actual results, performance, and opportunities to differ materially from those implied by such forward-looking statements. Among the bases for assumptions with respect to the potential for additional government funding are discussions and indications of support from government actors based on certain milestones being achieved. Factors that could cause actual results to differ materially from these forward-looking statements are set forth in the management discussion and analysis and other disclosures of risk factors for Electra Battery Materials Corporation, filed on SEDAR+ at www.sedarplus.com and with on EDGAR at www.sec.gov. Other factors that could cause actual results to differ materially include changes with respect to government or investor expectations or actions as compared to communicated intentions, and general macroeconomic and other trends that can affect levels of government or private investment. Although the Company believes that the information and assumptions used in preparing the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this news release, and no assurance can be given that such events will occur in the disclosed times frames or at all. Except where required by applicable law, the Company disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

FAQ

What is the production capacity of Electra's (ELBM) new cobalt refinery?

The refinery will produce 6,500 tonnes of cobalt annually, supporting production of up to 1 million EVs per year.

How much funding did ELBM receive from the Canadian government for the cobalt refinery?

Electra received a Letter of Intent for $20 million in funding from the Canadian Federal Government.

What percentage of ELBM's cobalt production is committed to LG Energy Solution?

LG Energy Solution will purchase up to 80% of the refinery's future production.

Where is Electra's (ELBM) cobalt refinery located?

The refinery is located in Temiskaming Shores, north of Toronto, Canada.

What are ELBM's expansion plans beyond the cobalt refinery?

Plans include a battery recycling refinery, a second cobalt sulfate facility in Bécancour, and a North American nickel sulfate plant.