Electra almost triples LG cobalt deal

As the only future cobalt sulfate supplier in North America, Electra Battery Materials Corp. has cut a deal to supply LG Energy Solution Ltd. with substantially more battery-grade cobalt than originally anticipated.

Piggybacking off an agreement inked in late 2022, Electra will now supply LG Energy Solution with 3,000 metric tons of cobalt contained in a cobalt sulfate product in 2025 and an additional 4,000 metric tons in each of the following years through 2029 for a total of 19,000 metric tons, nearly triple the 7,000 metric tons the initial agreement held.

"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," said Electra Battery Materials CEO Trent Mell.

Consistent with the original terms of the supply agreement, Electra and LG Energy Solution will also cooperate and explore ways to advance opportunities across North America's EV supply chain, including securing sustainable sources of raw materials. Financial terms of the supply agreement were not disclosed.

As a top electric vehicle battery manufacturer, which supplies Tesla and other automakers, LG Energy Solution has been positioning itself to better provide the critical component to EVs. However, due to the disparity between supply and demand, much like every other company along the chain, there continues to be a feverish spree of establishing partnerships and deals to carve out a place in the perceived future absence of fossil fuels.

According to research by CRU (Commodities Research Unit), a leading provider of business intelligence on the global metals, mining, and fertilizer industries, China is currently responsible for 71% of refined cobalt, 76% of refined nickel and 93% of refined manganese used in EV batteries.

Because of numerous concerns around ethically and environmentally sourced materials, as well as potential national security risks contingent on trade exports, like those recently declared by China on gallium and germanium, companies have been scrambling to build domestic supply.

To incentivize EV manufacture and production in North America, the U.S. Inflation Reduction Act has provided a $7,500 tax credit for vehicles that do not contain critical minerals sourced from China and Russia.

Foreseeing the necessity of domestic supply, LG Energy Solution recently announced a $5.5 billion investment in a future complex in Arizona to offset the eventual demand.

"Our decision to invest in Arizona demonstrates our strategic initiative to continue expanding our global production network, which is already the largest in the world, to further advance our innovative and top-quality products in scale and with speed," said LG Energy Solution CEO Youngsoo Kwon. "We believe it's the right move at the right time in order to empower clean energy transition in the U.S."

While Electra's cobalt refinery remains under construction, with additional capital being sought by government, strategic, and other sources to finalize construction and final commissioning, the company's future battery materials eco-park could produce enough cobalt sulfate to supply up to 1.5 million electric vehicles per year, as well as process up to 2,500 metric tons of black mass material per year for a greener tomorrow.