Ontario is home to North America’s only cobalt refinery – still under construction with a massive renovation that will be owned and operated by Fuse Battery Metals’ (TSXV:FUSE OTCQB:FUSEF) partner, Electra Battery Materials (TSX:ELBM NASDAQ: ELBM), the former Yukon Refinery that was fully permitted and in operation for many years in the aptly named city of Cobalt, Ontario.
In February, Electra Battery Materials (previously named First Cobalt Corp.) revealed that it had received a C$5 million investment from the Government of Canada to advance re-construction of its cobalt sulfate refinery in Temiskaming Shores, Ontario. This is on top of the C$10 million it received from the Canadian government in December 2020, and an earlier US$45 million investment commitment from mining giant Glencore PLC (LSE: GLEN).
Once fully operational, the facility will produce roughly 5 per cent of the global supply of battery-grade cobalt for electric vehicles and effectively pull supply away from China. In addition to the proposed supply agreement signed with Fuse Battery Metals, in 2021, Electra Battery Materials successfully signed another supply agreement with Glencore and China Molybdenum Ltd. to receive an additional 4,500 tonnes of cobalt hydroxide per year to refine into cobalt sulphate, thereby all but confirming its initial feedstock once operational.
“Canada has surpassed China as the top jurisdiction in the global battery supply chain, given its strength in raw materials mining and processing,” Trent Mell, CEO of Electra Battery Materials, said in a Feb. 9 statement. “Today’s announcement from the Government of Canada demonstrates its continued commitment to building a strong, domestic EV supply chain. We are grateful for this additional investment as it represents added validation of our progress and will allow Electra to continue to work toward our goal of producing secure, clean, and ethically sourced materials that are a crucial part of a sustainable future for electric vehicles in Canada.”
Image credit: Fastmarkets
In line with this, Electra Battery Materials revealed in July 2023 that its battery grade cobalt supply agreement with LG Energy Solution, a global manufacturer of lithium-ion batteries was extended and expanded from the initial terms that were first agreed upon in September 2022.
Under the terms, Electra will supply LG Energy Solution with 3,000 tons of cobalt contained in a cobalt sulfate product in 2025 and a further 4,000 tons each year after until 2029 for a total of 19,000 tons supplied.
“LG Energy Solution continues to strengthen its position as a global leader in the electric vehicle supply chain through its investments in Ontario and active collaboration with Canadian companies developing critical minerals and battery materials,” Mell said in a statement.
Fuse Battery Metals’ MOU with Electra
Fuse Battery Metals and Electra Battery Materials first entered into a memorandum of understanding (MOU) in August 2022 related to a Cobalt Raw Material Supply Agreement.
According to a release, the agreement is primarily focused on Fuse’s Teledyne and Glencore Bucke Cobalt Exploration Projects in Cobalt, Ontario, and are in close proximity to Electra’s cobalt sulfate refinery in Temiskaming Shores.
“This MOU is the first step towards a potential definitive agreement to supply cobalt raw material for Electra’s nearby cobalt refinery and sets out the terms by which we will exchange information with Electra to advance a potential transaction to involving the supply of cobalt raw materials,” Robert Setter, then CEO of Fuse Battery Metals, said in a statement.
Perhaps most significant for Fuse Battery Metals is its close proximity to Electra Battery Materials’ cobalt sulfate refinery in Temiskaming Shores and the fact that their collaboration will assist in supplying the demand for onshore EV battery materials.
As such, while the funding from the Canadian government is undoubtedly a win for Electra Battery Materials, it also is for Fuse Battery Metals.
Case in point, Fuse Battery Metals entered into an option agreement to acquire up to a 100 per cent interest in the Teledyne project in 2016 and is subject to a 2 per cent net smelter royalty (NSR) on the Teledyne Cobalt Property.
In spring 2018, Fuse amended and accelerated the option agreement and had earned a 100 per cent interest in the property with the vendors retaining the 2 per cent NSR.
The property is ideally located in Bucke and Lorrain Townships and consists of five patented mining claims totalling 79.1 hectares and 46 unpatented mining claim cells totalling approximately 705.99 hectares.
“For a bit of added perspective, our Ontario Cobalt Properties are located beside the former cobalt producing Agaunico Mine. From 1905 through to 1961, the Agaunico Mine produced a total of 4,350,000 pounds of cobalt, and 980,000 ounces of silver. The amount of cobalt produced from the Agaunico Mine is greater than that of any other mine in the Cobalt Mining Camp,” Tim Fernback, Fuse Battery Metals CEO, said in a statement.
FUSE BATTERY METALS COBALT PROPERTIES – TELEDYNE and GLENCORE-BUCKE (Cobalt, Ontario)
Image Credit: Fuse Battery Metals
Benefiting from the Inflation Reduction Act
In early 2023, Canada responded to the Inflation Reduction Act in the United States aiming at the country’s climate and energy security.
The Inflation Reduction Act actively encourages EV manufacturers to expand production in North America. The IRA incentivizes domestically sourced battery metals by aiming to provide billions of dollars in grants, loan programs and other investments for clean energy projects.
“The Inflation Reduction Act removes any doubt that we can stick with the status quo. It has made the rush for innovation in clean tech more competitive than ever. Our transportation energy sector has been pivotal to Canada’s economic success for over a century. We have an opportunity to be a world leader in terms of clean fuel production while meeting Canadians’ evolving energy needs and climate goals,” Canada’s Environment and Climate Change Minister Stephen Guilbeault said in a speech.
As companies like Fuse Battery Metals and Electra Battery Materials ramp up activities, the Inflation Reduction Act will be beneficial in not only reaching their goals but providing innovation as the move towards clean energy becomes more vital.
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