Kazakhstan's Eurasian Resources Group (ERG) finalized an agreement with Canadian Electra Battery Materials Corporation to provide cobalt hydroxide to its Toronto facility. Electra plans to utilize this material for the production of cobalt sulfate, a crucial component for electric vehicle (EV) batteries. The commencement of cobalt supply, totalling 3,000 tons, to the Electra plant is set for 2026.
Under the three-year contract, ERG will deliver cobalt from its ERG Metalkol manufacturing site in the Democratic Republic of the Congo (DRC). Presently, the DRC holds a dominant position, accounting for approximately 75% of global cobalt production. The majority of this raw material is processed in China, which controls around 80% of the cobalt chemicals market.
In response to the U.S. government's decision to withdraw its $7,500 subsidies for EVs made from materials produced by concerning businesses, many producers in the U.S. and Canada are prioritizing in-house cobalt processing to ensure robust supply chains for EV batteries. Accordingly, Electra is constructing its inaugural cobalt sulfate plant in North America.
Electra invested $200 mn in constructing the facility and requires an additional $60 mn to finalize the process. Once operational, the plant will have the capacity to produce enough cobalt for approximately 1.5 mn electric vehicles annually.
ERG and Electra are planning to continue their collaboration, with Electra proposing the construction of a second cobalt processing plant in Quebec. Having already secured a five-year agreement with LG Energy Solution for up to 80% of its products, Electra anticipates high demand for remaining cobalt products. Consequently, the Toronto plant may face capacity shortages, prompting considerations for future expansion.
Recent reports indicate that the authorities of the DRC may suspend the operations of nine subcontracting companies working at ERG mines due to their lack of local control, which contravenes national laws. This development signals escalating tensions between ERG and the African nation.
ERG's ultimate beneficiaries include the Ministry of Finance of Kazakhstan (40%), Alexander Mashkevich (20.7%), the Ibragimov family (20.7%), and Patokh Shodiev (18.6%).
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