Over the last few weeks, mining news has been dominated by stories of cobalt extraction and mines opening up. The renewed global interest in this key mineral has been largely propelled by its importance in the electric vehicle industry. An industry the Canadian government is determined to invest heavily in as part of its push for a greener future and economic recovery. An investment which clearly now extends up, and down the supply chain, as their investment in a cobalt refinery in Ontario shows.
Cobalt refinery gives Canada a leg up on battery metals
Last week, one small Canadian firm announced it was the lucky recipient of C$10 million in loans and grants from the government. The assistance is intended to cover almost 15% of the cost of their newest project, a battery metal compliant cobalt refinery.
The ten million is divided into a Federal interest free loan and a Provincial Grant. The loan comes from the Government of Canada, out of the economic package designed to boost jobs and industries in Ontario. While the Grant is from the Government of Ontario’s Heritage Fund. They represent a substantial investment in the future of cobalt and the refinery.
For the Canadian company, First Cobalt, this funding is a serious sign of confidence and enthusiasm in their project to upgrade to battery grade cobalt refining. A field which currently is dominated by China, but will be of increasing importance in the years to come as the electric vehicle industry pushes up demand.
It is but a drop in the ocean of the money Canada is pouring into this industry, but one which secures them an echelon of the entire electric vehicle industry supply chain.
Electric vehicles may not be thirsty for petrol, but they sure are for Cobalt
The renewed global interest and obsession over cobalt and other battery metals is closely aligned with the movement towards electric vehicles. As battery technology has improved and public perceptions begun to change over the environmental cost of fossil fuel power, fully electric options have begun to become a cost effective moral imperative.
This has spurred demand for cobalt, especially cobalt hydroxide, necessary for the construction of lithium ion batteries. Because of its capacity to accept slow and steady charge without excessive degradation, cobalt is essential in long term battery performance, and thus is perfect for electric vehicles.
While some concerns have been raised about the ethics involved in the acquisition of cobalt (notably in Africa) the industry is not ready to switch over to less efficient options. Quite the contrary, cobalt demand is growing with the electric vehicle sector, thanks in part to government investments.
Canada’s Electric Vehicle push extends up, as well as down, the supply chain
It’s not just battery metals and refineries that have sparked Canadian enthusiasm and investment. Government money has been flowing into projects at the other end of the supply chain as well.
Two months ago we covered the Governments’ role in refitting the Ford Assembly Plant at Oakville for the production of primarily electric vehicles. While the government’s investment was only a portion of the C$1.8 billion project, it was key to sealing the deal between Union workers and Ford Canada.
A potent sign of the federal and provincial governments investment in the electric vehicle supply chain, it was not the last. Since then they have invested in other electric vehicle production plants, as well as a close partnership with private firms to build up the charging station infrastructure.
The overall goal? 100% electric vehicle fleet for light vehicles in Canada by 2040, part of their ambitious carbon reduction policies.
Electric vehicle fleet just one motivation for cobalt supply chain investments
The Canadian government’s dogged pursuit of the electric vehicle industry supply chain is in large part motivated by their push for cleaner energy. Transitioning to electric vehicles would offer substantial reductions in carbon emissions (provided the electricity is coming from renewable sources!), but it also offers other advantages to the economy.
As evidenced by the cobalt refinery investment this week, the federal and provincial governments are not withholding any cash to establish the growing electric vehicle supply chain. But there are other motives for their spending, the Covid-19 economic crisis has freed unheard of levels of capital for projects that promise employment or industry. Keeping jobs, and the supply chain, in Canada, means long term advantages for the industry and producers up and down the supply chain.
Even as Covid-19 dampens holiday spending, and cheer, the governments of Canada and Ontario seem determined to hand out investment capital to get projects off the ground. Especially if they are in the growing supply chain of electric vehicle production!
DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of CAStocks, its management, staff or its associates. Please review our disclaimer for more information.
This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.