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Inflation pressures put the squeeze on Temiskaming refinery project

Electra Battery Materials to release engineering study on capital costs of battery materials industrial park
Spring construction at Electra Battery Materials' refinery expansion project in Temiskaming (Company photo)

Electra Battery Materials should have a better handle on the final price tag on its Temiskaming refinery expansion when an engineering report comes out in a few weeks.

In a webcast last week to analysts on its fourth quarter results, the Toronto company said it expects to deliver an update in the second quarter on the financing required to finish construction of the refinery and place a timeline to put it into production.

Costs are going up and we are delayed but we will get there,” said Electra CEO Trent Mell.

Just outside the town of Cobalt, Electra is refurbishing and expanding the former Yukon refinery, which had been mothballed since 2015. 

The company acquired the facility in 2017 to be the cornerstone of its vision for a battery minerals industrial park to feed the North American electric vehicle sector. Since China processes a majority of the world’s nickel, cobalt and manganese, Electra wants to a bite out of that market with the Temiskaming plant.

Electra currently has 38 staff at the site. The plan is eventually have 200 to 300 on the payroll.

The company said “considerable” progress despite a rate of inflation not seen since the 1970s, a tough financing environment, and some supply chain impediments that’s resulted in delays in equipment reaching the site on time.

Risks are part of the process, Mell said, in building any project these days. When factoring in the lingering impact of the pandemic, it’s  created “a tumultuous environment, for sure.” But Mell said they’ll soon come up with concrete plan to share.

Construction-wise, the company reports its metallurgical lab is commissioned along with the new solvent extraction building and a cobalt sulphate load-out facility, which will house their final cobalt product.

About 95 per cent of the procurement work is done.

Processing equipment continues to arrive on site. Some was discovered damaged on arrival.

There have been significant delays in getting solvent extraction tanks shipped over from India. They were supposed to arrive last October. It now looks like June.

There’s been a world-wide shortage of computer chips needed for the automated equipment at the plant. The arrival date of these chips has been pushed back from January to June.

Mell said they have a number of financing streams to explore with government and various strategic equity partners.

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In summing up a busy 2022, the capper was the pre-Christmas kickoff of its black mass recycling trials. 

It involves taking the powdery residue extracted from shredded lithium-ion batteries and recovering the high value metals, such as nickel, cobalt, lithium, copper and graphite, and running it through Electra’s proprietary refining process. 

They are currently running a two-shift schedule for the black mass operation, expected to continue on a demonstration-scale level through to August.

The company said it’s getting better than anticipated metal recoveries and expects those results will improve.

They’ve produced its first nickel MHP product and down the road, they’ll be producing lithium carbonate and manganese, copper and graphite products as well. The first shipments of the nickel product is heading out the door sometime in the second quarter. 

The company said it’s working on a model for a larger commercial-scale black mass facility.

Mell said it’s been rewarding and exciting to watch the day-by-day progress.

“We’re getting better batch by batch,” he said, and it’s getting the market’s attention.

Mell said these products are “very marketable and sought after by the industry,” particularly auto and battery manufacturers who want to recycle as much waste battery material as possible to create a closed loop supply chain.

A huge impetus for Electra is the U.S. Inflation Reduction Act and the US$391-billion pool of available government money. Washington wants to “on-shore” everything it needs to fill the industry supply chain for the climate and clean energy tech transition. Canadian companies like Electra would part of that chain based on the Free Trade Agreement.

Last September, Electra inked a three-year strategic supply agreement with LG Energy Solution, the world’s second-largest EV battery manufacturer, to supply Temiskaming-produced cobalt sulfate to the South Korean multinational.

Also in the cards is an upcoming technical study for expansion into Quebec. Electra has been invited to build a second refinery at an emerging battery industrial park being built in Bécancour, Que. Vale is building a nickel plant there. Electra will release a prefeasibility study on this endeavour later this year.