Three Fires invests $10 million in Electra

After signing a memorandum of understanding with First Nation-owned and operated Three Fires Group to form a joint centered focused on recycling lithium-ion battery waste, Electra Battery Materials Corp. announced a C$10 million (US$7.6 million) strategic investment by the First Nations group focused on generating prosperity for current and future generations.

"Since announcing plans to form a battery recycling joint venture, we have had active discussions with Three Fires on how to best leverage our respective expertise and experiences to capitalize on the growing lithium-ion battery recycling market," said Electra Battery Materials CEO Trent Mell. "Following a successful black mass recycling trial at our battery materials park in Temiskaming Shores, the strategic investment by Three Fires will help us to prioritize our focus and accelerate development of a permanent 2,500 metric ton per annum recycling refinery, resulting in near-term cash flow at a low capital intensity while we continue to advance the cobalt sulfate refinery."

Investing in Ontario recycling

The Three Fires Group was developed to create generational wealth and prosperity for its people and member nations through widespread investments, including tourism, real estate, retail, full-service professional services, and now clean energy projects.

"We are excited for this opportunity as a strategic path forward in allaying our shareholder First Nation's concerns around the rapidly growing EV battery manufacturing sector in southwestern Ontario," said Three Fires CEO Phil Lee. "The region has announced billions of dollars of government and corporate investments in the past 10 months, but no announcements yet on how the critical end of life cycle portion of the value chain will be treated."

"What we desperately need is a clear plan to recycle the estimated 30 metric tons per day of EV battery manufacturing waste that is expected to be generated on our traditional lands. The Ministry of the Environment, Conservation and Parks estimates that all existing landfill capacity in the province will be exhausted in the next nine to 12 years. We are confident that our joint venture with Electra will provide a turn-key solution that is mutually beneficial for Canada, the Province of Ontario, First Nations, and industry partners such as VW and LG-Stellantis," he added.

Under the previously announced joint venture, Electra and Three Fires are collaborating to source and process lithium-ion battery waste generated by manufacturers of current and future battery cells, electric vehicles, and energy storage systems.

The waste will be processed at a primary recycling facility to be located in southern Ontario to produce black mass material that will be further refined using Electra's proprietary hydrometallurgical process at its refinery complex north of Toronto to recover high-value elements, including lithium, nickel, cobalt, copper, manganese, and graphite.

"Our solution, which would cost approximately US$30 million to develop, includes the building of a primary recycling facility located in southern Ontario that will shred lithium-ion batteries, process battery scrap, and provide a steady supply of black mass to be refined by Electra at its refinery," said Lee.

In addition to the black mass, the facility will recover aluminum, copper, and plastics, which will also be recycled.

Strategic Investment

Three Fires' strategic investment in Electra is part of a larger C$20 million (US$15.2 million) private placement of Electra at C$1.10 per unit. Each unit will consist of one Electra share and one warrant that may be exercised at a price of C$1.74 over a 24-month period.

Under the terms of the proposed strategic investment, Three Fires would purchase C$10 million of the units, and Electra will grant Three Fires the right to nominate up to two members of Electra's board of directors upon closing and the right to participate in future equity offerings, including to maintain its pro rata percentage ownership in the company.

"We see this strategic relationship as an opportunity to position Electra as a platform for greater participation by First Nations in the transition to a low-carbon economy, particularly relating to lithium-ion battery recycling," said Mell. "This would include participation at the board level and all levels of the organization, ensuring that Electra's business strategy and ESG practices are aligned with the values and priorities of Canada's First Nations."

Three Fires investment is subject to Electra securing at least C$10 million in additional financing.

CORRECTION: This article has been updated on July 7, 2023 to remove misrepresentation of Three Fires Group affiliation with Anishinabek Nation.