Automotive News Canada - March 2023 - 26

26
* MARCH 2023
Cobalt tests the industry's mettle
There's pressure to build
EV batteries with locally
sourced minerals, but for
the foreseeable future
there are few, if any,
options for automakers
By DAVID KENNEDY
T ORONTO BUREAU CHIEF
STRIDES ARE BEING MADE TO
bolster North America's battery ecosystem,
but fully onshoring cobalt - one of
the rarer metals used in lithium ion batteries
for electric vehicles - is likely to
prove elusive, industry experts say.
Mines in the Democratic Republic of
Congo (DRC) produce about 70 per cent
of the world's cobalt today, while China
accounts for a similar percentage of the
refining market, said Ying Lu, senior
research analyst for cobalt at the UK
research firm Wood Mackenzie.
" We don't really see this DRC-China
power axis [changing] anytime soon, " Lu
said. This is despite
" signs of regionalization "
in the
North American
and European cobalt
industries, she said.
" The West is
Yu: Battery
recycling could
be a source of
large amounts
of cobalt, but
not until the
batteries now
in use reach
the end of their
lives.
FILE PHOTO
already aware of the
supply security issues
due to the high concentration
in the
cobalt market, " Lu
said.
EVs are in their
infancy but they're
the largest consumer
of cobalt, accounting
for about 37 per
cent of the market,
she said, and they will
drive cobalt demand
higher as adoption
accelerates. Consumer
electronics are a close second in demand,
while the metal is also a key ingredient in
superalloys used in aerospace.
'BIG HILL TO CLIMB'
With demand far outstripping local supply,
a fully self-sustaining North American
cobalt industry is " a big hill to climb, "
said Trent Mell, CEO of Electra Battery
Materials Corp.
The Ontario-based mineral processor
is constructing what will be North
America's only cobalt refinery. The plant,
about 500 kilometres north of Toronto, had
been scheduled to open in spring but is
facing supply chain-related delays.
As it moves toward commissioning the
site, Electra signed a deal last fall to supply
battery-cell manufacturer LG Energy
Solution with 7,000 tonnes of battery-grade
Mell: A self-sustaining North American cobalt industry seems
unlikely, but the U.S. Inflation Reduction Act should help
develop the battery supply chain. FILE PHOTO
RESILIENT DEMAND
Per kilogram, cobalt is the most expensive
component of lithium-ion batteries.
Use of the metal also faces scrutiny
because of human-rights concerns
surrounding mining in the Democratic
Republic of Congo. While recent
advances in battery chemistry have
reduced the amount of cobalt needed
per battery cell, it is likely to remain a
key component. Demand for the metal
could increase by as much as 75 per
cent by 2030, requiring 17 new mines
globally.
Source: International Energy Agency
working on partnerships with North
America's limited number of cobalt producers
to add supply streams from North
American sources.
PROMISING PROSPECTS FOR MINES
Canada has no primary cobalt mines
today, said Mitchell Smith, CEO of
Vancouver-based Global Energy Metals
Corp., and a member of the Battery Metals
Association of Canada board of directors.
But exploration opportunities exist for
mines with cobalt as the primary target
and others that would produce the metal
as a byproduct, he said.
cobalt over the next three years, enough
to produce batteries for about 1.5 million
EVs. Because Electra is the sole source of
locally processed cobalt, many others in
the supply chain are hoping to tap into its
output, Mell said. The company " could sell
it all tomorrow. "
But while refining will be local, most
of the raw material will be from overseas.
Shipments from the DRC will make up
Electra's " baseload, " Mell said.
" I think most of us, [automakers]
included, acknowledge that the DRC is
going to continue to play a pretty big role.
Having said that ... there is a keen motivation
that that's not 100 per cent of our
needs. "
Electra is also developing a mine in
Idaho - the Iron Creek project - and
Canada already has a strong foothold
in cobalt, with the metal produced
as a byproduct at mines in and around
Sudbury, Ont., Smith said.
According to Natural Resources
Canada, the country's mines produced
nearly 5,000 tons (4,500 tonnes) of cobalt
in 2021, essentially all of that coming
from mines looking primarily for nickel.
Canadian production accounts for about
two per cent of the roughly 220,000-ton
(200,000-tonne) global cobalt market, Lu
said.
Despite the short-term challenges in
developing new sources, Smith expects the
recent trend toward localizing the battery
supply chain to extend to cobalt.
" Having material from North America
or Europe being able to be processed in
relatively close proximity, especially
given the auto industry is really that main
driver behind cobalt demand ... is going to
be very important, " he said.
WHAT ABOUT THE UNITED STATES?
Mell and Lu see cobalt deposits in Idaho
as having high potential.
Electra's Iron Creek project remains in
the early stage of development, but Mell
said the company is seeing traction to
advance work in the state from U.S. government
departments such as defense and
energy.
Australia-based Jervois Mining, meanwhile,
began commissioning its Idaho
Cobalt Operations (ICO) mine in October.
Once open, ICO will be the only cobalt
mine in the United States, Jervois said.
Yet concentrate produced at the mine
" must currently be sent outside the country, "
Jervois said, because the United
States has no refineries.
The auto industry is the biggest consumer of cobalt, which is used for lithium ion
batteries for EVs. There are no sources - yet - for cobalt in North America, which
means it will continue to come from other continents. PHOTO: GENERAL MOTORS
Mell said Electra's soon-to-open Ontario
refinery would require modifications to
process the type of cobalt from ICO.
Battery recycling also could eventually
produce large streams of cobalt, Lu said,
but the research analyst estimates that
Having material from
North America or
Europe being able to be
processed in relatively
close proximity,
especially given the
auto industry is really
that main driver behind
cobalt demand ...
is going to be very
important. "
Mitchell Smith
Global Energy Metals Corp.
North America " won't see volumes coming
from that sector until 2030 or so, " as
the initial wave of EV batteries must first
reach the end of their lives.
LEGISLATION HOPES
While Mell is skeptical about the prospects
for a self-sustaining North American
cobalt industry, he said the recent passing
of the Inflation Reduction Act (IRA) in the
United States will provide added encouragement
for the supply chain.
Electra is still waiting for clarity on
how the US $7,500 EV tax credit will be
enacted. The " foreign entities of concern "
clause within the legislation will mean
vehicles containing battery materials from
countries such as China or Russia will not
qualify for the credit, Mell said.
" A pound of material and your credit
goes to zero, so if you're an emerging or
an established automaker trying to grow
market share in the EV world, with China
accounting for about 80 per cent of refined
cathode materials, that's a huge risk to
your business plan. "
Likewise, Smith of Global Energy
Metals Corp., expects the IRA to spur
much-needed investment throughout the
battery supply chain. Onshoring the supply
chain, he said, will require capital
from both private and public actors.
" There needs to be a real push for these
projects to be developed. Not only does
that take industry, but that takes support
from the government as well. " - ANC
Automotive News Canada - March 2023

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