Electra Battery Materials well positioned for 2025

Just north & south of the U.S. / Canadian border is a hotbed of economic activity — tremendous active & planned buildouts [over 35 announced] of EV, lithium-ion batteries, and critical materials facilities to serve the U.S. market for both EVs & stationary energy storage systems.

In Ontario, Electra Battery Materials (NASDAQ: ELBM) / (TSX-v: ELMB) owns 100% of a fully permitted, very low-carbon (runs on hydroelectric power) refinery on 600 acres, being expanded & refurbished to produce battery-quality Co in sulfate. In the U.S., the Company has high-potential copper (“Cu“) assets looking good given the recent move in price.

The Company’s longer-term vision includes battery recycling & Ni sulfate production, thereby onshoring critical mineral refining processes. The replacement value of this facility, once completed, was estimated by a Hatch study to be US$250M = C$359M. With a recent reverse split behind us, Electra has ~15M shares outstanding.

In September, the Company announced it had achieved a 99% purity, (technical grade) lithium (“Li“) carbonate product. This news came soon after 1) the award of a $29M investment from the U.S. DoD, 2) a preliminary term sheet for $29M via a prepayment facility, and 3) a JV with Three Fires Group to produce battery black mass (“BM“).

Three Fires is an Indigenous-owned economic development agency. The JV will source & process end-of-life + off-spec batteries to produce BM at a state-of-the-art facility to be built in southern Ontario. This is a win-win-win for ELBM shareholders, local communities, and regional EV & battery makers.

Last year, tremendous progress was made on multiple fronts at Electra’s battery materials complex (“BMC“). Further funding initiatives are being negotiated to finally complete major expansion, retrofitting, and working capital needs. This strategically important BMC could be operational in 2H/26.

It’s surrounded by new & existing facilities owned by; GM, Ford, Stellantis, Volkswagen, Tesla, Honda, Toyota, BMW, Hyundai, POSCO, Umicore, Samsung SDI, Panasonic, BASF, LG Energy Solution & LG Chem. Why so much activity in this globally significant battery/EV hub? Western countries are trying to diversify from China for geopolitical reasons.

While doing so, NA producers should maximize the quantity of materials they derive from regional sources. Despite what you may be hearing, demand for Li-ion batteries is strong, due to the collapse in Li, Co & Ni driving Li-ion battery pack prices much lower, and making shipping a larger portion of costs,

Ocean shipping requires truck/rail to port in the originating country, then weeks on the high seas, followed by more trucking/rail across NA. By contrast, from southern Ontario to U.S. cities like Miami, Chicago, or San Diego, rail takes a third or a quarter of the time and is far cheaper.

As mentioned, Electra was awarded $29M by the U.S. Dept. of Defense. What prompted the DoD to fund a non-U.S. company with no stipulations or obligations over the Company’s production? Simple, the U.S. is keeping its options open, not for the next few years, but the next few decades when competition for many resources will be a lot higher.

Not only are battery materials important economically, but they’re fast becoming crucial in military applications, making them indispensable for national defense & homeland security. For those who fear that Ni/Co is falling by the wayside in new iterations of batteries, military applications should alleviate those fears.

Even small advantages (no matter the cost) in the performance of weaponry, transport, and communications will be urgently pursued by the global military-industrial complex. Add to that, luxury vehicles & high-power stationary energy storage systems, like those used in important data centers, and the ongoing need for Co/Ni is clear.

Reducing reliance on China is not the only goal, slashing transportation emissions and simplifying supply chains are also important. Electra’s BMC should come online at an ideal time as the Canadian federal & provincial governments of Quebec & Ontario deploy meaningful sums for infrastructure (most notably road, rail, and power).

Government aid has been pledged in various forms but has barely started trickling in, which is why many junior miners had a terrible 2024. By comparison, {see chart below} Electra did fairly well after a difficult 2022-23. For many, 2025-26 will be make-or-break years.

Electra continues to discuss its prospects with government entities. Given that the U.S. Dept. of Defense is providing just under C$29M, Canada needs to step up. CEO Trent Mell and the team have said they are exploring every opportunity at both the provincial & federal levels.

Alarmingly, many battery materials are mined a long way from N. America. Over 90% of Ni is mined in Indonesia (heavily backed by Chinese groups), the Philippines, New Caledonia & Russia! Graphite –> China, Madagascar, Mozambique & Brazil. Manganese –> S. Africa, Gabon, Australia, Ghana, then China/India.

The vast majority of battery materials are refined in China, with Australia (Li & Ni) a very distant second. There’s a dire need for critical battery materials sourced regionally to supply up to $200 billion of facilities recently opened or being built in N. America.

Even if the above 181,475-tonne forecast shown below for 2030 is too high, N. American end-users have every reason to use Electra before turning to Finland, China & Taiwan, and European OEMs would benefit from diversifying away from Asian supply — they should give Electra a call.

Readers are reminded that BM recycling can be done on the same industrial site, but not in the same building as the Co sulfate production. This business segment has been brutal over the past 18 months due to the collapse in Co, Li & Ni prices. Existing players like Li-Cycle are in trouble, but the tough environment will keep a lid on new capacity.

By the time Electra’s recycled materials come to market, probably in 2026-27, metals prices should be meaningfully higher. And, if the company’s current approach to commercial agreements is maintained, management plans will likely charge a fixed margin so that it doesn’t carry the risk of low prices. If prices soar again, Electra can switch to market pricing.

By the time Electra’s recycled materials come to market, probably in 2027, metals prices should be meaningfully higher. And, management plans to charge a fixed margin, so that it doesn’t carry the commodity risk. If prices soar again, Electra can always switch to market pricing.

With inflation remaining elevated, real, tangible, hard assets like Electra’s BMC off attractive valuation potential. As mentioned, Hatch assessed the value (after completion) of the BMC to be C$359M. This is a very high-risk investment proposition, but if CEO Mell can secure additional non-equity funding, the capital gain potential is significant.

Disclosures: The content of this article is for information only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research [ER], (together, [ER]) about Electra Battery Materials, including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is not to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible under any circumstances for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and does not perform market-making activities. [ER] is not directly employed by any company, group, organization, party, or person. The shares of Electra Battery Materials are highly speculative, and not suitable for all investors. Readers understand and agree that investments in small-cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making investment decisions.

At the time this article was posted, Electra Battery Materials was a recent (not current) advertiser on [ER] and Peter Epstein owned shares in the company. [ER] hopes to have Electra as a sponsor again in 2025, so Mr. Epstein’s views should be considered biased…

Readers understand and agree that they must conduct due diligence above and beyond reading this article. While the author believes he’s diligent in screening out companies that, for any reason whatsoever, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. [ER] is not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, or reported facts.