Electra Battery Materials Corporation (TSX-V:ELBM, OTCQX:FTSSF) said it has signed a five-year cobalt tolling contract and has amended the previously concluded five-year cobalt hydroxide feed purchase agreement with Glencore PLC (LSE:GLEN).
The company has said it intends to produce a traceable, low carbon battery grade cobalt product for the electric vehicle market and the parties will market the Canadian-made cobalt sulfate as a premium brand product that is sustainably mined and refined with renewable hydroelectric power.
"Today's announcement is a validation of our strategy by the world's largest cobalt miner," said Trent Mell, Electra Battery Materials CEO in a statement.
"We are very pleased to partner with Glencore as a means to establish our cobalt sulfate product as a premium brand in the EV market due to its traceability and low carbon footprint," he added.
READ: Electra Battery gets greenlight from engineering report for lithium-ion battery recycling
Electra Battery Materials said that first production of battery-grade cobalt sulfate is anticipated in Q4 2022, with an annual production target of 5,000 tonnes of cobalt, subsequently increasing to nameplate capacity of 6,500 tonnes per year.
Glencore will have an option to toll approximately 1,000 tonnes of contained cobalt at Electra's refinery and Electra will have an option to purchase an additional undisclosed quantity of cobalt hydroxide feed material from Glencore, each on an annual basis for a five-year term for refining at Electra's Canadian refinery.
The feed purchase agreement largely reflects the original cobalt hydroxide purchase agreement and is for the remaining quantities from the original contract that are not part of the tolling arrangement, the company added.
A third-party life cycle assessment supports the view that Electra's refinery will have the lowest carbon footprint in the global automotive supply chain, resulting in the world's most sustainable cobalt for the electric vehicle market. As part of its commitment to sustainable production, Electra intends to join the Fair Cobalt Alliance and adopt the Cobalt Institute's Cobalt
To date, Electra has concluded feed supply contracts with Glencore and IXM SA for a total for 4,500 tonnes of contained cobalt per year for a five-year term.
Glencore will use its extensive network to market Electra's premium cobalt sulfate globally. Electra's cobalt feedstock is sourced only from the world's highest quality cobalt mines and the refinery has strong ESG credentials compared to its peers. Both Glencore and Electra expect the battery-grade cobalt sulfate produced at the Canadian refinery to command a premium above normal market prices.
Glencore has been a strong supporter of Electra for a number of years, funding the initial engineering studies on the refinery and providing technical input to the company. Electra said it is pleased to continue working with Glencore as the refinery comes online in Q4 2022.
Approval of 2021 Long-Term Incentive Plan
Electra Battery Materials also announced that on December 2, 2021, at the company's annual general and special meeting shareholders approved amendments to the company's long-term incentive plan (2021 LTIP).
The 2021 LTIP increases the number of options, PSUs, RSUs and DSUs from 18,000,000 options to 25,500,000 options; from 4,000,000 PSUs to 5,000,000 PSUs; from 2,000,000 RSUs to 4,500,000 RSUs; and from 4,000,000 DSUs to 7,000,000 DSUs, such that the maximum number of common shares to be reserved for issuance under the 2021 LTIP is increased from 28,000,000 common shares to 42,000,000 common shares.
This represents approximately 7.9% of the current issued and outstanding common shares, with the increase in total common shares reserved for issuance driven by the increase in the company's employee base as it has grown into a development stage. The 2021 LTIP remains subject to the TSXV's final approval.
Electra Battery Materials is building North America's only fully integrated, localized and environmentally sustainable battery materials park.
Leveraging the company's own mining assets and business partners, the Electra Battery Materials Park will host cobalt and nickel sulfate production plants, a large-scale lithium-ion battery recycling facility, and battery precursor materials production, which will serve both North American and global customers.
Electra also owns the advanced exploration-stage Iron Creek cobalt-copper project in Idaho, USA.
Contact the author at jon.hopkins@proactiveinvestors.com