Inflation, labour costs and supply chain issues may bump up the construction price tag to finish the refurbishment and expansion of a Temiskaming cobalt refinery.
But Toronto’s Electra Battery Materials doesn’t expect any delays in the schedule to have the facility running by year’s end.
In a news release of its first quarter financials, Electra said based on market trends, the US$67 million capital budget “could be exceeded by five to 10 per cent.”
The company cited cost pressures from inflation, global supply chains, Russian trade sanctions, the increasing cost of steel, copper, nickel and freight rates have combined to put the “original budget at risk.”
Labour and contractor rates are eight to nine percent higher from wage settlements with construction trades. It makes for a very competitive labour in Ontario to secure experienced trades, the company said.
The refinery is located between the town of Cobalt and Temiskaming Shores.
Located on the site of the former Yukon refinery between the town of Cobalt and Temiskaming Shores, Electra is building North America’s first integrated battery materials industrial park that will involve refining cobalt, nickel and extracting valuable minerals pulled from battery recycling. The first phase of plant commissioning — to ensure all systems are go — begins in December.
Electra said there’s $51.9 million in cash in the bank, plus $6.5 million left over from government subsidies for the refinery project. The company spent $25 million in the quarter. which involved breaking ground on the foundation for a new solvent extraction building.
"Despite supply chain disruptions and inflationary price pressures caused by the lingering effects of the global pandemic and recent geopolitical developments Electra made considerable progress in Q1, advancing the construction of our expanded cobalt refinery," said company CEO Trent Mell in a statement.
During the quarter, the company pocketed an industrial sewage works permit and had the Ontario government approve its refinery closure plan. They also cut a two-year deal with international miner and commodities trader Glencore to buy all the nickel and cobalt Electra plans to recover from its battery recycling business expected to start next year.
Mell said passing these milestones “paves the way” to commission their refinery expansion by the fourth quarter of this year, “consistent with our expected timelines."
