Electra Battery Materials’ (TSX-V: ELBM; NASDAQ: ELBM) shares jumped 40% Monday on news it received US$20 million from the United States’ Department of Defense (DoD) to help develop its cobalt refinery in northern Ontario.
Construction has started on Electra’s US$250 million facility, located in Temiskaming Shores about 500 km north of Toronto. It will likely be North America’s only cobalt sulphate refinery once it’s commissioned. It aims to produce 6,500 tonnes of cobalt a year, supporting the annual production of more than 1 million electric vehicles.
“Electra is committed to strengthening the resiliency of the North American battery supply chain,” Electra CEO Trent Mell said in a news release. “We are grateful to the U.S. Department of Defense for its support. On issues of national security, there are no borders between Canada and the United States.”
The investment follows more than US$10 million funneled to other Canadian companies by the DoD over the past 18 months, as Washington prioritizes domestic production of critical minerals needed for the green energy transition to reduce reliance on foreign supply chains.
Electra shares gained 20¢ to close at 70¢ apiece on Monday, valuing the company at $40.6 million. Its shares traded in a 52-week range of 41¢ and $1.06.
Supply chain strength
The funding was made available through the Additional Ukraine Supplemental Appropriations Act, and in line with Title III of the U.S.’ Defense Production Act (DPA), which aims to strengthen domestic supply chains.
Electra is expanding the facility, with permits ready. It would have the lowest carbon footprint in the world, the company says.
LG Energy Solution has signed a three-year deal to buy a supply of battery grade cobalt from Electra for the manufacture of lithium-ion batteries. The South Korean company will purchase up to 80% of capacity for the first five years.
Cobalt source material for the facility will come from Glencore (LSE: GLEN) and Eurasian Resources Group (TSXV: ELBM; NASDAQ: ELBM) mines in the Democratic Republic of Congo, material that Electra says would otherwise go to China.
Electra is considering opening a second cobalt sulphate refinery in Bécancour, Que. and a nickel sulphate plant that it says would be strategically located in North America.
$10.4M investment
In May, Fortune Minerals (TSX: FT) received a US$6.4-million grant to help it advance its NICO cobalt-gold-bismuth-copper project in the Northwest Territories. In June last year, the DoD awarded Ucore Rare Metals (TSXV: UCU; US-OTC: UURAF) with US$4 million to help it develop its RapidSX technology that produces the rare earth magnet materials terbium and dysprosium.
Fireweed Metals (TSXV: FWZ; US-OTC: FWEDF) has drawn DoD interest for its Mactung tungsten project in Yukon, with the department potentially offering assistance with the company’s feasibility and environmental studies.
From the G&M: Apr 25, 2024 — Ottawa and Ontario have announced a multibillion-dollar deal that will see Honda Motor Co. expand its Alliston, Ont., plant….
From the CBC: Sep 30, 2023 — This week, Quebec and Ottawa committed $2.7 billion toward an electric vehicle battery factory near Montreal.
From the CBC: Feb 9 2024 – The federal government gives a $5 million grant to cash-strapped Electra (Battery)
Aug.19 2024: The US Department of Defence gives 20M$US to Electra Battery.
Seems like the Canadian government has a big problem investing in our own entrepreneurs. If ELBM was a foreign company or a Quebec company historical facts suggest that things might be quite different. Not to mention that they actually have a multi-year contract signed with LG.
Incidentally, it appears the US DOD simply sent the money with no need for self aggrandisement. When ELBM managed to get the pittance from Ottawa, every politician from senior members of the federal government on down made the trip to Northern Ontario for the photo op.
Oh! Canada!