Cost pressures emerging from systematic inflation, constrained global supply chains and the sanctions on trade with Russia have put the capital budget of Electra Battery Metals’ cobalt refinery, in Ontario, at risk.
The TSX- and Nasdaq-listed company said on Thursday that project cost inputs, such as steel, copper, nickel and freight rates, have all increased. Labour and contractor rates have increased, with 8% to 9% wage settlements in construction trades, as well as a number of concurrent developments in Canada that created a very competitive market for experienced trades.
Based on the trends in the market, Electra CEO Trent Mell said the $67-million capital budget could be exceeded by 5% to 10%.
“The company’s early decision to create an experienced owner’s team has helped mitigate some of these impacts and management believes the company is well-positioned to navigate a more complex landscape,” said Mell.
He reported that Electra had successfully kept the project on schedule to commence dry commissioning in December, despite global supply chain disruptions.
"Most notably, we received our Industrial Sewage Works permit, started construction of the solvent extraction plant, and received approval of our Closure Plan. Completion of these milestones paves the way for the commissioning of our refinery expansion in the fourth quarter, consistent with our expected timelines."
The Toronto-based company is building an expanded refinery with a crystalliser circuit of 6 500 t/y of cobalt production.