Electra proved it can recover 97% of nickel and cobalt — and decided not to build the refinery yet

A preliminary engineering study showed nickel and cobalt recovery above 97% in Electra Battery Materials' refining project. But the company put the new refinery on the back burner — the priority now is finishing the cobalt refinery already under construction in Ontario.

On September 16, 2026, Electra Battery Materials released the results of a preliminary engineering study (FEL-1, short for Front-End Loading 1, the first formal engineering stage of an industrial project) for a two-phase nickel refinery. Phase 1 would convert ore — feedstock coming directly from a mine, not from recycling — into battery-grade nickel sulfate, with capacity of approximately 20,000 tonnes per year of contained nickel, and nickel and cobalt recoveries of 97% or higher, according to preliminary process modeling. The plant's preferred location, according to the study, is in the southeastern United States, though the company is keeping other North American locations open. Estimated capital for this first phase ranges between US$530 million and US$675 million. A potential Phase 2 would expand the plant to also process 'black mass' — the shredded material from used lithium-ion batteries — adding another 20,000 tonnes per year of nickel capacity, plus cobalt, lithium and graphite byproducts. The company was explicit in classifying both phases as 'long-term opportunities': the immediate priority remains finishing and commissioning its cobalt sulfate refinery already under construction in Ontario, the first of its kind in North America, whose cobalt recovered by the future nickel refinery could eventually serve as additional feedstock.

The most striking figure in the announcement is the recovery rate — 97% nickel and cobalt recovery is a metallurgical process number validated only on paper, but one that, if sustained at industrial scale, would place Electra among the few Western nickel refining projects with efficiency comparable to the most advanced Asian refineries. But the most revealing part of the story isn't technical, it's strategic: the company itself decided not to move forward now, even with the process validated. That sequencing has clear financial logic. A US$530 to 675 million refinery is a capital commitment that only makes sense once cash flow and operating credibility have been proven on something smaller — in this case, the cobalt sulfate refinery in Ontario, which is already under construction and is the first project of its kind in North America. Building two refineries at once would multiply execution risk without necessarily multiplying the speed of getting into operation; finishing one at a time reduces the chance that a cash or schedule problem compromises both simultaneously — a financial version of the same principle that governs any large industrial project: prove the process first, commit the capital later. The split between Phase 1 (ore) and Phase 2 (recycled batteries) also reveals market-timing reasoning. Recycling lithium-ion batteries at meaningful scale in the United States today is limited, because the volume of electric vehicle batteries reaching end of life is still small — the real wave of scrap should only show up once the EVs sold starting in 2020 begin being retired in bulk. It makes sense, then, to size Phase 1 to process ore, available now, and reserve recycling capacity for when the input — used batteries — actually exists in industrial volume.

For anyone evaluating critical minerals refining projects, the Electra case teaches how to separate two questions that are often treated as one: does the process work, and is it worth building now? A preliminary engineering study with 97% recovery answers the first question — but deciding to postpone construction, prioritizing a smaller project already underway, is the answer to the second, about capital discipline and risk sequencing. Companies that confuse these two decisions tend to commit too much capital, too early, to multiple projects at once — and it's exactly that excess of simultaneity that tends to stall financing for growth-stage resource companies.