Canadian cobalt refinery developer Electra Battery Materials on Tuesday announced a non-binding term sheet for a $20-million prepayment facility from a strategic player in the battery materials sector.

The funding forms part of a broader strategy to raise $60-million for the completion of North America’s first battery-grade cobalt refinery project.

Several other financing discussions have been advancing alongside the proposal, the TSX-V-listed company reported.

Electra CEO Trent Mell said in a statement that the interest from strategic partners reflected strong confidence in the company. “With continued support from investors, governments and downstream customers, we are well-positioned to realize our vision of a North American battery materials supply chain,” he said.

The $20-million investment matches the amount Electra received from the US Department of Defense under Title III of the Defense Production Act last month. Currently, more than 90% of battery-grade cobalt is produced by Chinese companies, with no production in North America.

Electra's refining complex, located north of Toronto, historically produced nickel and cobalt and is now being expanded to supply North American battery manufacturers with cobalt sulphate for lithium-ion batteries. The site was also used for a year-long battery recycling demonstration in 2023.

To complete the $250-million cobalt facility, Electra estimates an additional $60-million in capital is required.

The proposed investment includes an initial $10-million investment followed by another $10-million during the commissioning phase of the refinery. In return, Electra would provide marketing rights for a portion of future production until the facility’s repayment. The transaction remains subject to certain conditions, including parallel financing developments that are progressing.

Electra is also exploring other non-dilutive financing options, including government programmes, to secure funds necessary for the construction and commissioning of the refinery.

Once operational, the facility will produce about 6 500 t/y of cobalt, sufficient to support the production of over one-million electric vehicles a year. LG Energy Solution has already committed to purchasing up to 80% of the facility’s capacity over the first five years.