Electra Battery Materials Corp. has stopped construction on its cobalt refinery in Northern Ontario as the project runs overbudget and the cash-strapped company pursues new funding sources to get work back on track.
“We are going to need more money,” CEO Trent Mell said on the company’s first-quarter earnings call May 11.
Costs to get the site up and running, he added, could be twice as high as the original estimates.
The Toronto-based startup began recommissioning the refinery in Temiskaming Shores, Ont., about 500 kilometres north of Toronto, in 2021. If operational today, it would be the only cobalt sulfate processing plant in North America, offering a local source of the key ingredient to electric vehicle battery makers.
The project remained on track through much of 2022, but has faced equipment delivery challenges and rising expenses over the past six months.
Electra had planned to have the plant, which was originally built in the 1990s, operational by the end of last year. But in November, issues with “critical” equipment forced it to push the commissioning timeline to this spring. In February, the company said damaged equipment deliveries would extend the timeline further.
The battery materials company is now running low on funds.
To limit capital expenditures, Electra has largely halted construction at the refinery, though a “small” in-house team remains on-site, Mell said.
“It really is a question now of just managing the capital, managing our expenditures and getting ready to resume construction once we’ve lined up the remaining portion of the capital.”
Electra’s original plans pegged spending on the facility at US$62.7 million. Updated cost assessments project costs will run between $115 and $124.2 million, with higher expenses for materials, equipment, contractors and several other inputs contributing to the higher price tag.
The company had spent about US$50 million on the plant as of April 30.
Electra is engaging with a series of commercial, strategic and government partners, but the timeline for completing the work is now dependent on securing new capital, Mell said.
The company is also considering a sale.
It recently initiated a strategic review of its business, which will assess sales of all or portions of its assets, and potential investments or merger opportunities, among other alternatives.