An Australian mining and exploration company hopes a renewed government commitment in the critical minerals sector will help clear its pathway to becoming the world’s largest producer of ethical cobalt in the next few years.
- Cobalt is used in the production of lithium-ion batteries
- The Australian government recently announced a $2 billion boost for critical minerals projects
- Mining analyst Peter Strachan is concerned about the project’s feasibility
As battery technology evolves to use less of the element, an independent mining analyst is unsure how economically viable it will be compared to other mineral projects.
Cobalt Blue Holdings Limited was founded in 2016, with its premier project being a mine near Broken Hill projected to produce almost 17,000 tonnes of high-quality cobalt sulfate, used in making batteries, a year.
Previously valued at more than $500 million, the project has been supported by numerous stakeholders, including at a local level due to its potential to create about 400 full-time jobs in the region.
It was also granted “major project status” in 2022 by the federal government, effectively helping expedite the approvals process and signalling its formal support.
Cobalt Blue investor relations manager Joel Crane said, since then, its demonstration plant in town had been working to complete a definitive feasibility study (DFS) as a proof of concept for potential investors.
“We are going as diligently and as fast as we possibly can [and] we do expect to have this completed by the end of the year, perhaps in the first couple of months of next year,” Mr Crane said.
“Next steps then are to finalise agreements with partners.
“We signed with a Japanese partner, who’s going to likely take a major interest in the mine and then help us along the road to the next big stage — funding the project.”
Timely boost to critical mineral projects
Requiring several hundred million dollars to start operations, Mr Crane hoped the federal government, which recently boosted its critical minerals financing for Australian projects by $2 billion, would make securing funding easier for them and their peers.
“We have done everything we can to position ourselves in terms of doing the right paperwork [and] making the right relationships,” he said.
“So once we get that DFS economic study out, that’s when we take this next stage to qualify for part of what is now a $4 billion fund.”
Cobalt is one of 25 elements on Australia’s official Critical Minerals List, and is also on similar lists for the US, European Union, Japan, and India.
Federal Resources Minister Madeleine King said projects involving cobalt were of great interest to the government and she appreciated Cobalt Blue’s ambition to become a global player in its supply.
“We see terrible environmental and human damage being done by the mining of this in the Congo, [so] Australia being able to provide an alternative source of cobalt is very important,” Ms King said.
“The cobalt project in Broken Hill is very positive, and it shows how regional communities will be able to benefit from future-facing industries.”
Cobalt value on the decline?
Despite the excitement, mining analyst Peter Strachan believed the government must find clear evidence of the Broken Hill project’s long-term viability before investing taxpayers’ money.
He said while cobalt would likely still be used in batteries, it now must compete with other minerals introduced into the mix.
“Initially, it was thought [key battery ingredients were] going to be cobalt and nickel because the early lithium-ion batteries had nickel and cobalt in their cathode,” Mr Strachan said.
“But now lithium-ion batteries are going into the lithium-ion, phosphate — that’s what Tesla is using in its battery chemistry.”
Mr Strachan was also concerned the versatility in the price of cobalt, and the Broken Hill deposit being “not particularly high grade”, might hinder the project’s appeal to investors.
“You’d have to [mine and process it] for less than $100 a tonne of ore mined because of the [current] value of [around] $35 a kilogram for cobalt, and you’ve got 0.07 per cent cobalt to mine,” he said.
“I’m sure [the government] will support it to go forward, but whether they actually stump up hard cash, is another thing.
“I think there are plenty of other projects that the government could be supporting that have much clearer pathways to financial success.”
Ms King said Export Finance Australia evaluates applications and considers each project’s potential for success and capacity to repay the loans before approving them.
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