Trent Mell, CEO of Electra Battery Materials (previously First Cobalt), talks reshaping perspectives, opportunities and talent strategies in the face of a shifting landscape.
The COVID-19 pandemic has sent disruption through just about every industry, including yours. How has Electra managed this period, especially while remaining so active in the market?
Like everyone, we’ve learned to adapt. We’ve gone through tremendous growth, probably tripling in size since the pandemic began. Despite the challenges, we’re an entrepreneurial team, and it may have been a little easier to adapt than some of the bigger offices. A lot of our employees are in the field. We’ve got geologists out drilling, outdoors, largely in Idaho. Our project team can’t stop working, but they’re masking, social distancing, testing, signing into our refinery site. It’s gone well and we’ve had no issues with workforce contagion. Along with other employers, we require vaccination as a condition of employment and site access. We’ve tried to follow best practices and, knock on wood, it’s gone quite well for us.
You’ve made a number of deals over the course of the pandemic. Was anything about your due diligence or transaction process different because of COVID-19?
What made it tough was people would otherwise want to see the asset during the financing process. We’ve got a permitted hydrometallurgical refinery north of Toronto. The markets opened up and I think we ended up with a better deal. But our initial path to securing debt, and dealing with banks and private equity firms, would normally have necessitated site diligence. That was tricky. There was a lot of third-party reliance. We talked about doing a drone drive through the refinery but ultimately didn’t need to. Any business can do a lot online. But I’m a huge believer that whether it’s things like diligence, doing a deal, or engaging with your team: you need that face to face. Hybrid is fine, but virtual work can’t be the norm. You lose efficiencies, mentoring opportunities, and the osmosis you get in a communal environment where you’re all there, talking water cooler talk.
Looking ahead, what’s your perspective on the mining and metals sector overall?
We’re a Toronto-based company. As somebody who has spent 20 years or so in the mining industry — starting with Barrick Gold — I’m used to a very precious metal-centric world. When we started this company almost five years ago, it was a little bit lonely. It reminded me of my days in the Palladium market, because it was a small market. We’ve gone from a cobalt company to a more diversified play.
The energy space is going to be fabulous in the year ahead. That ties to the velocity of investment announcements in America and North America. We’ve been late adopters of electric vehicles. But look at the billions of dollars announced initially at the auto assembly plants, and now the battery plants. GM and POSCO Chemical announced that cathode active material plant. They’re working their way up the ecosystem to where we are, and that’s not going to change.
We came off a low of US$12 a pound, and we’re closing out the year (2021) 50% upward, at about US$33 a pound. The market’s growing 26% a year, so I’m extremely bullish. It was a good year, and it’s only going to get better.
Tell us about how you evolved from First Cobalt to Electra Battery Materials. How would you describe the redefinition of the strategy?
Consider who Electra (formerly First Cobalt) is. We’ve got fabulous mineral assets in Idaho and there are probably several mines in that belt over the next few years, like copper and cobalt. But the value of our company today is really derived from our permanent Met site. Think of Timmins and Sudbury, we’re sandwiched between those two camps. So we’re a chemicals company, a conversion, in the midstream of the battery market. The rebrand has been six or eight months in process, but we couldn’t really go there until we had the cobalt plant permitted and financed. We needed to walk before we could run and demonstrate credibility around our original business plan.
It really happened as a result of downstream conversations. One particular automotive client said, “Look, it’s nice Electra is going to have battery-grade cobalt sulfate, but that’s not enough. We need battery-grade nickel and a place to recycle our material.” They knew we would follow best practices. What North America really needs is an integrated site so that you bring those three products that I mentioned, and then you take that next step and you make it into precursor, because otherwise the product that you’re shipping and bagging has 80% moisture. It’s bad for the carbon footprint and cost structure. If we can eliminate that crystallization step, it drives down the cost. Somebody’s got to do it. We took that plunge, and it’s been really well received by the market so far.
With that in mind, what’s your perspective on the energy transition overall? What’s your take on readiness in the sector and among non-mining stakeholders?
As hard as it may appear or be to build a plant, whether an assembly or battery plant, the further you go upstream the harder and longer it’s going to take to get that done. We all know there’s demand. Pressure’s going to build on the supply chain. We’ll see the crunch coming, whether it be lithium, nickel, cobalt, manganese. I’m focused on the processing side because there’s a gaping hole in North America. We think we can get there in three years, given that we’re permitted. Starting from a greenfield site in Canada adds probably two or three more years. When mining in the US, it’s 7 to 10 years as a rule of thumb. That’s the issue. How do you mitigate that?
I’m a capitalist. I think a sense of urgency is starting to pick up. You hear it in the boardrooms of automotive companies. But it’s going to take a new social contract. Young people growing up today can draw more of a direct connection between what’s coming out of the ground and what’s in their phone or what’s making the environment a better place. I’m hopeful social and urban views towards mining and extraction, and its role in the broader economy, will only get better — provided we mine and operate responsibly.
At the Shanghai auto show, there were 130 different EV (electric vehicle) models. That freight train is coming to North America. We had 16 or so last year, 32 this year. That’s going to keep climbing and we in North America need the range, and bigger vehicles. The technology and battery packs are finally there. I think even those in the market are surprised just how fast it’s happening and we all need to work together. It’s going to be a crunch. It should be a lot of fun for those of us in the middle of it, though.
Can you share your views on ESG, and the changes and new realities we need to embrace?
There are issues we need to get through, but the ESG (Environmental, Social and Governance) dialogue excites me because it’s very different from the early days in my career, when CSR (Corporate Social Responsibility) was considered kind of mushy. ESG is quantifiable. In my world, the product we’re selling goes into an electric vehicle. The car’s carbon footprint starts where the minerals were extracted, then work their way on a boat through our process, through the battery plant. Every step of the way, there’s a care factor and disclosure obligation around that carbon footprint.
That’s fantastic for us in Canada. We’re on a hydroelectric grid and it’s a hydrometallurgical Met site. It’s renewable power and we’ve got almost zero emissions. The challenge is that a new company is a morass of different standards. There is greenwashing both on our side and the investment side. I wish we had a clear roadmap to the rules and disclosure obligations and the standard we can measure ourselves against to have an apples-to-apples comparison. When you do, a company like ours is going to shine. We already know from our life-cycle assessment that we’re going to have the cleanest cobalt product on the planet for battery materials. It’d be nice to benchmark that in a more transparent fashion than we can today.
Last but certainly not least, digital transformation and the war for talent have reached new levels due to the pandemic. How can the industry accelerate the way it responds to these imperatives?
It’s a good point. We’re exploring more, so getting a drill rig and a good, in-house exploration team has gotten harder. I’m fighting that, the war [for] talent and the great resignation. It comes back to my point that although I will want people back in the office, and I think it’s important to have that interaction, we need a more flexible approach to our talent development. Hybrid is going to be important for a 24-year-old who wants to work at home on Fridays. I trust that they’re going to be engaged and working. I think that’s appealing to talent today.
I’ve also got a global view on the way we hire people. My project lead is in Sudbury. Our commercial lead is in Europe. I’m looking for another VP that may or may not be in Toronto. As much as I like the traditional office, and it’s preferable in some ways, mitigating the war [for] talent as an entrepreneurial company comes down to speed. You’ve got to look beyond your city and make it work with the technology available.
