A contract for the long-term supply of cobalt hydroxide was secured in early April between cobalt and copper producer Eurasian Resources Group (ERG) and Canadian battery minerals producer Electra Battery Materials, whereby ERG’s cobalt material will be sourced from ERG’s Metalkol cobalt production and chemical plant in the Democratic Republic of Congo, and delivered to Electra’s Canadian battery-grade cobalt sulphate refinery complex.

The binding letter of intent signed between the two parties, effective April 1, 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 t/y of 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 yearly capacity.

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 about 75% of global cobalt production and about 90% of this cobalt is destined for electric vehicle (EV) batteries, according to ERG and Electra, which add that most of this material is being refined in China, which controls roughly 80% of the cobalt chemicals market.

Under the US’ Inflation Reduction Act (IRA), EVs containing critical minerals sourced from foreign entities of concern will not qualify for the $7 500 EV credit starting in 2025. These and other incentives are intended to support the strategic imperative of establishing a regional EV battery supply chain in the US and Canada.

“Partnering with a recognised leader in sustainable mining practices is essential for Electra to produce secure, clean and ethically sourced battery materials,” says Electra CEO Trent Mell.

He adds that Electra’s Canadian refinery is uniquely positioned as North America’s first cobalt sulfate refinery, with IRA-compliant feedstock to support growing EV demand.

“ERG is a responsible global player who supports the green energy transition,” says ERG CEO and Global Battery Alliance co-chairperson Benedikt Sobotka, adding that 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.

Supplying ethically-produced cobalt hydroxide to Electra, he says, meets ERG’s values and supports North America’s cobalt demand, as well as the region’s rapidly expanding battery supply chain.

ERG is a founding member of the Global Battery Alliance and the Metalkol facility is assured under the Responsible Minerals Assurance Process, which was established to provide assurance to manufacturers that critical minerals are sourced from a responsible and ethical supply chain.

Electra previously announced a five-year offtake agreement with battery maker LG Energy Solution for up to 80% of production, and demand for the remaining production far exceeds production capacity.

Further, Electra and ERG are exploring further collaboration to derisk 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 EV 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 t 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 EVs a year.

Electra’s low carbon hydrometallurgical refinery in Canada is permitted and has a current replacement value of about $200-million.

The company requires an additional $60-million 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.