(Updates shares)
By Jeff Lewis
TORONTO, Dec 16 (Reuters) - Canada's First Cobalt Corp FCC.V said on Wednesday it has secured C$10 million in government loans and grants, allowing it to accelerate startup and expansion of North America's first cobalt refinery.
Cobalt is crucial for the lithium-ion batteries used in the fast-growing electric vehicle sector, and the financial backing is the latest bet on the burgeoning industry by the Ontario and Canadian governments.
First Cobalt's cobalt refinery in Ontario could also ease North America reliance on China, which dominates the supply chain for rechargeable lithium-ion batteries.
Under Wednesday's deal, Canada will provide a C$5 million interest-free loan to First Cobalt while the Ontario government will give the company a C$5 million non-repayable grant.
Shares of First Cobalt surged as much as 46% Wednesday to C$0.205, their highest since April 2019. company said funding will support restart of the refinery, estimated to cost C$77 million.
The plant, located about 600 kilometers (373 miles) from the U.S. border, would be the sole North American producer of refined cobalt. Miner Glencore GLEN.L is to provide feedstock.
At its peak the refinery will produce 25,000 tonnes of battery-grade cobalt sulfate annually, which represents 5% of the global market for refined cobalt, First Cobalt said.
Canada and Ontario have stepped up financial support for EVs in hopes of spurring a domestic industry.
Last week, Ottawa unveiled a C$3 billion innovation fund, in part to develop a “battery ecosystem” from mineral extraction and processing through to manufacturing and recycling.
In October both governments agreed to support a C$1.8 billion overhaul of Ford Motor (NYSE:F) Co's F.N Oakville assembly plant to manufacture EVs.