Insight Conversation: Trent Mell, Electra Battery Materials

Battery metals refining is a part of the battery supply chain that does not get as much attention in the west, with most battery metal refineries located in China. But companies have started venturing into this crucial part of the electric vehicle industry, including Electra Battery Materials in North America.

Electra is close to commissioning a cobalt sulfate plant at its Battery Materials Park north of Toronto in Canada, as well as starting a battery demonstration recycling plant this year. The company has also launched a battery materials park study in partnership with the Government of Canada, the Government of Ontario, Glencore and Talon Metals for a nickel sulfate plant and co-location with a precursor cathode active materials, or PCAM, plant.

Electra CEO Trent Mell recently spoke with Jacqueline Holman, S&P Global Commodity Insights' EMEA Metals News Lead, about the projects on the company's plate as well as what's on the road ahead.

Electra is making a big push to ensure battery materials can be refined in North America. What else can be done to increase battery metal supply and refining outside of China?

It is in focus this year with a lot of discussions with battery makers, OEMs and their partners. There is a concerted effort by auto companies to say, "look, we're not going to stop there, we want to opt for everything."

The supply chain has kind of been working its way backwards from cars up to raw material, which is unfortunate, because if you go up the supply chain it takes longer. It's three to five years to get a permit and build a refinery; it's even longer for a mine.

I think you're going to see more announcements over the course of the year on the chemical midstream, but we do need a lot more mining. Nickel is often coming up in conversation with OEMS – we need a lot more nickel mining on the continent, because a lot of the mines are in operation are going towards smelting and steel applications.

Electra previously said it's on track to start dry commissioning of its cobalt refinery north of Toronto in December. What is next at the project?

Commissioning the refinery is a brownfield project, so the pre-existing hydrometallurgical refinery is going to serve for warehousing. The crystallization circuit is in a completely new complex about 50% completed and new equipment delivery is happening every day. We finished all the concrete work at the solvent extraction plant.

We're not immune to the global supply chain, so we've got 10 things we're watching closely — roughly in terms of the delivery schedule. We've already got an increase in our capex, so it's pretty stressful, but the team is doing well and we're working hard to ensure we are in the position to start dry commissioning in Q4 with the idea of achieving production in Q1 2023. We re-assess every quarter.

How is the $1-million study in Ontario into the possible nickel sulfate and PCAM plant going?

We're taking that in two steps. We're doing a scoping study, which is now done subject to our sign off. The study looked at different options, including sizing and feed types. Then we're going to land on two or three options that we're going to carry through to a prefeasibility study.

More importantly, the scoping study is the document I will take with me for some of my strategic talks with the OEMs, as I alluded to earlier. There is a lot of talk of nickel in North America, because that's the linchpin for PCAM plants and their input is going to help steer us to a couple (of options) we're focused on.

When do you expect to make a concrete decision on these plants?

We're walking the talk with studies and we have every intention to put ourselves in a position to make a formal decision. Having said that, if you look at cathodes, the nickel plant's footprint by definition would comfortably be three times larger than our integrated cobalt and recycling plants. That means it's a big capex. There is also the feed discussion – where is that nickel coming from?

We've looked at a bunch of options and the OEMs have their options as well. It's a huge opportunity for us, for OEMs, for Canada, and the final decision, I think I can comfortably say, will be tied to an OEM relationship and their discussions and input on the feed, as well as likely help on the capex.

The capex for something like is certainly well over half a billion to build a nickel sulfate plant. In order to build something like that it will take a team approach with government, with Electra and with our downstream partners to get this off the ground. The final construction decision is going to be kind of club affair.

What are the updates on the preliminary discussions with the Government of Quebec on a second cobalt refinery going?

With POSCO, GM and BASF coming together, Quebec's value proposition is interesting as it's a brownfield site with hydroelectric power, which plays to our ESG strategy. A lot of the services are there and so the Quebec model is a bit of a plug-and-play – bringing all the players together.

The one piece of the supply chain that they did not have lined up was cobalt, so we entered into the discussion. We're building the only cobalt plant to be built outside of China in 30 years, so we were a logical partner.

There are two different discussions that have to be had. One is with the federal government's Strategic Innovation Fund, which could be matched by Investissement Quebec. It would help us understand the capital structure of how we would finance something like that. The second piece is the completion of a prefeasibility study, which is expected before end of this year.

I would say it is early days for us and if I look at the timeline to developing production probably in 2025 or 2026 – it looks like something that's quite actionable.

What's interesting with Quebec is that it might allow us to build a more flexible refinery than the one in Ontario, which is designed to take the same feed as the rest of the world – cobalt hydroxide from DRC – but the plant in Quebec is starting from scratch, so you may see us design some plant that has a little bit more flexibility and can take in concentrate from Idaho or metal dissolution and things of that nature.

Battery recycling is also important to the circular economy. What should governments and companies focus on to boost recycling?

The supply of batteries and black mass today is modest relative to future projections going up to 2030 and so I like to make two points to investors. One, you've got to distinguish the battery shredding and then the processing, and two, you look at the feedstocks.

The feeds today are portable electronics like laptops and mobile phones, but by 2025, the feedstock is going to come from scrap from the battery making process to try re-integrate wastage back into the supply chain, and then in the late 2020's, 2030 is when you get the off-market EV batteries.

From our side what we can do and what government can do is focus on getting it right by using low carbon footprint technologies such as our hydrometallurgy hydroelectricity.

We're not taking so much as a build. It's more a get-it-right strategy. Our demonstration plant and our first module will focus on these high cobalt portable electronics and get a process that recovers everything.

Manganese is the toughest of the suite, but if you can get commercial-grade graphite, lithium carbonate, in addition to your nickel, cobalt, copper and then you have a process that's pretty attractive.

There is probably not a lot for governments to do, but as companies we're all facing patented IP. I think it's overplayed, because in 20 years we'll all be similar, but in these early innings, the little steps that we all protect are pretty important and I think companies should being ready and making sure you've got the partnerships so that you can put your technology to use.

You mentioned your demo plant. Is the planned commercial battery recycling plant still on track to be commissioned in 2023?

I think this step is going to be important to us. What we're doing currently is we're procuring the black mass so we have some material that's on our lap right now.

We've recommissioned our lab and we're testing the characteristics of some of the feedstocks then in late August-early September we'll start running black mass through by 50-100 mt. Once we do that, we'll probably have to come back to market with some values around capex and production capabilities.

By order of magnitude, we might be looking at something like a 5,000 mt/year black mass plant for the first module. It's about getting it right rather than getting it big.

The margins are quite attractive with recycling. Moreover, it's also attractive to the OEMs. Our strategy around recycling is a little different from other players in North America in that we don't do recycling as an end in itself. We do it as an additive to primary feed and by that I mean a little bit of black mass and a lot of primary feed can create a lot of green batteries as opposed to just focusing on black mass and producing a smaller number of cells from that material.

Is Electra planning any other battery recycling plants?

I think with the markets today, I'd say no. But realistically the expertise that we're developing is transferable. We've not looking at it right now because we've got our plate full, but we've been approached to build recycling plants in Europe and elsewhere in the US.

So just as we're going to replicate our cobalt plant in Quebec, the work we're doing with nickel and recycling, not a lot of folks are doing that and I think that's something that we could definitely replicate elsewhere on the continent or in Europe. Given our size, it's likely in a partnership fashion.