Glencore to buy recycled nickel and cobalt products from Electra in 2023  

Glencore (LSE: GLEN) has agreed to purchase nickel and cobalt products for a year from a battery recycling plant that’s poised to go online in 2023 – Electra Battery Materials’ (TSXV: ELBM; US-OTC: ELBMF) Battery Materials Park project situated to the north of Toronto. 

The agreement covers the 2023-2024 production of the metals, which will be produced from the refining of black mass feed generated from lithium-ion batteries. Black mass is referred to the powdery fraction that’s produced after cells from used batteries are crushed.  

Electra is also in talks to supply lithium, copper and graphite to other firms, the company said.  

“Right now, they (Glencore) are by far the absolute giants in the recycling space,” Electra’s CEO Trent Mell told The Northern Miner. “When you look at battery recycling today, it’s portable electronics: cell phones, laptops, etc. Glencore is the absolute dominant player there… so I think it’s great to have a partner like that.”  

Electra is building an integrated battery materials park that will host cobalt and nickel sulphate production plants, a large-scale lithium-ion battery recycling facility, and battery precursor materials production. Electra also owns the advanced exploration-stage Iron Creek cobalt-copper project in Idaho. 

In December, the company aims to  complete construction of its $84 million battery grade refinery. The second phase would see a battery recycling circuit scheduled for 2023, followed by the battery grade nickel sulfate and PCAM plants sometime mid-decade.

In February, Electra partnered with Glencore, Talon Metals (TSX: TLO) and the Ontario government to assess the potential of creating a battery materials park in northern Ontario. Based on the deal, the provincial government would contribute $250,000, a sum to be matched by Electra. Glencore and Talon would each provide $100,000. The study could help expedite the building of the battery materials park. 

Electra has links with more than 30 black mass producers and expects to work with them for supply feed for the recycling facility. Initially, the company expects to process about 4,500 tonnes of black mass, the equivalent of recycling batteries from more than 20,000 electric vehicles per year. 

Over the next decade, the company expects to build more capacity (or “modules”) as its recycling capacity grows with market demand for processing of black mass. 

Studies have shown that the recycling of lithium-ion batteries, used in EVs, is not expected to take off before 2030 due to the lack of recyclable feedstock. Mell believes that Electra can tackle this issue through its modular approach.  

“I think it depends on what you are targeting, how big you are going, if you are going to scale up nickel rich EV batteries it might be getting there too fast,” he said. “For us we are taking a modular approach. 4500 tonnes of black mass per year is not a big share of the market. We are also targeting that portable electronic market.”  

The company can scale up its operations once the “EV markets matter on the recycling side,” added the CEO.  

Before going commercial with the recycling plant in 2023, Electra plans to operate a demonstration plant in 2022 using existing equipment at a cost of $3 million. 

The company says that its hydrometallurgical refinery is expected to provide higher yields at a lower cost and lower energy intensity compared to traditional facilities.  

Cantor analyst Matthew O’Keefe described Electra’s deal with Glencore as positive. “This latest agreement with Glencore adds confidence in the addition of a battery recycling plant on-site,” he wrote in a research note to clients.  

“Electra continues to make progress on developing its Battery Materials Park which will supply the North American automotive market with a secure, ethically sourced, domestic source of low-carbon raw materials for the production of EV batteries,” added O’Keefe.  

At presstime in Toronto, Electra was trading at 31.5¢ per share, down 1.5¢ or 4.5%, within a 52-week trading range of 25.5¢ and 42.5¢. The company has 534.3 million common shares outstanding for a market cap of $168.3 million.