Electra Battery Materials Corporation announced that its battery grade cobalt supply agreement with LG Energy Solution (LGES; KRX: 373220), a leading global manufacturer of lithium-ion batteries, has been extended and expanded from terms initially announced in September 2022. Electra will now supply LG Energy Solution with 19,000 tonnes of battery grade cobalt over a five-year period beginning in 2025. The material will be supplied from the only cobalt sulfate refinery in North America, located north of Toronto, Ontario.

Under the updated terms, Electra will supply LG Energy Solution with 3,000 tonnes of cobalt contained in a cobalt sulfate product in 2025 and a further 4,000 tonnes in each of the following years through 2029 for a total of 19,000 tonnes under an agreed pricing mechanism. Previously, Electra had agreed to supply LGES with 7,000 tonnes of contained cobalt in a cobalt sulfate product over a three-year period, starting this year. 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, but not limited to, securing of sustainable sources of raw materials.

Financial terms of the supply agreement were not disclosed. According to research by CRU, 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. Favourable public policy and growing EV adoption rates are accelerating the development of a North American refining and battery recycling ecosystem by Electra.

The U.S. Inflation Reduction Act underscores the importance of creating a domestic EV battery supply chain by extending a $7,500 tax credit for vehicles that do not contain critical minerals sourced from China and Russia.