Battery recycler Electra receives investment commitment from Three Fires Group

Electra Battery Materials Corp., Toronto, says it has received a commitment for a strategic investment from the Ontario-based Three Fires Group Inc. in support of advancing Electra’s battery materials park north of Toronto and accelerating its battery recycling strategy in North America. The Three Fires investment is expected to form part of a larger financing by Electra totaling up to CA$20 million (around $15.2 million U.S.).

 “Since announcing plans to form a battery recycling joint venture, we have had active discussions with Three Fires on how to best leverage our respective expertise and experiences to capitalize on the growing lithium-ion battery recycling market,” Electra CEO Trent Mell says. “Following a successful black mass recycling trial at our battery materials park in Temiskaming Shores, the strategic investment by Three Fires will help us to prioritize our focus and accelerate development of a permanent 2,500-ton-per-annum recycling refinery, resulting in near-term cash flow at a low capital intensity while we continue to advance the cobalt sulfate refinery.”

Mell adds, “We see this strategic relationship as an opportunity to position Electra as a platform for greater participation by First Nations in the transition to a low-carbon economy, particularly relating to lithium-ion battery recycling. This would include participation at the board level and all levels of the organization, ensuring that Electra’s business strategy and ESG practices are aligned with the values and priorities of Canada’s First Nations.”

RELATED: Electra produces lithium from battery recycling trial

Three Fires CEO Phil Lee says his firm is excited for the opportunity as a strategic path forward in allying its shareholder First Nation’s concerns around the rapidly growing electric vehicle (EV) battery manufacturing sector in southwestern Ontario. “The region has announced billions of dollars of government and corporate investments in the past 10 months,” he says, “but no announcements yet on how the critical end-of-life cycle portion of the value chain will be treated.

“What we desperately need is a clear plan to recycle the estimated 30 tons per day of EV battery manufacturing waste that is expected to be generated on our traditional lands,” Lee adds. “The Ministry of the Environment, Conservation and Parks estimates that all existing landfill capacity in the province will be exhausted in the next nine to 12 years. We are confident that our joint venture with Electra will provide a turn-key solution that is mutually beneficial for Canada, the province of Ontario, First Nations and industry partners such as VW and LG-Stellantis. Our solution, which would cost approximately $30 million U.S. to develop, includes the building of a primary recycling facility located in southern Ontario that will shred lithium-ion batteries, process battery scrap and provide a steady supply of black mass to be refined by Electra at its refinery.”

Electra says the quantum and terms of Three Fires’ investment is expected to be confirmed following review and approval from its shareholder First Nation and funding sources, and consultations with the federal and provincial governments.

Electra adds it expects the investment will be facilitated by way of a non-brokered private placement of units of Electra at a price of CA$1.10 (84 cents) per unit. Each unit will consist of one common share of Electra issued at a price of $1.10 per share and one common share purchase warrant which may be exercised at a price of CA$1.74 ($1.32) per warrant over a 24-month period. The company says under the terms of the proposed investment, Three Fires would purchase units and Electra will grant Three Fires the right to nominate up to two members of its board of directors upon closing, and the right to participate in future equity offerings, including to maintain its pro rata percentage ownership in the company.

Completion of the strategic investment also is subject to Electra securing additional financing of not less than CA$10 million (around $7.6 million), it says. Electra and Three Fires are currently in discussions with various government and third-party stakeholders to secure at least CA$10 million of additional financing to advance Electra’s refinery project and battery recycling operations. In the event Electra satisfies this condition with the issuance of additional units, the company says it could issue up to a maximum of 17.24 million units in the placement. Completion of the placement remains subject to the approval of TSX Venture Exchange and Electra will provide further details regarding the placement as soon as available.

Electra and Three Fires say they had previously announced plans to form a joint venture focused on the recycling of lithium-ion battery scrap in Ontario supported by Electra’s proprietary black mass capabilities that recover high-value elements.

RELATED: Electra achieves plant-scale recycling of black mass

Under the joint venture, the companies say they will collaborate to source and process lithium-ion battery scrap generated by manufacturers of current and future battery cells, EVs and energy storage systems. The scrap will be processed at a primary recycling facility to be located in southern Ontario to produce black mass material that will be further refined using Electra’s proprietary hydrometallurgical process at its refinery complex north of Toronto to recover high-value elements, including lithium, nickel, cobalt, copper, manganese and graphite. In addition to the black mass, the primary recycling facility will recover aluminum, copper and plastics, which will also be recycled, according to Electra.

The company’s refinery complex is located in northern Ontario, where the electricity grid mostly runs on renewable energy sources, which Electra says makes it a low-carbon emitter. Combined with its hydrometallurgical process, Electra says its recycling plant is estimated to be five times less carbon intensive than a comparable plant using a pyrometallurgical process in a jurisdiction with an electricity grid similar to China’s. Additionally, the company says its process generates less waste and enables the recovery of lithium and other byproducts that pyrometallurgical processes cannot recover.