Cobalt Blue Holdings Ltd (ASX:COB, OTC:CBBHF) has strengthened its relationship with leading Japanese multinational company Iwatani Corporation through a potential partnership to develop the Broken Hill Cobalt Project (BHCP) in New South Wales, Australia.
The company has executed a non-binding Heads of Agreement (HoA) for the new arrangement which comes hot on the heels of a similar agreement late last year for a potential partnership for COB’s proposed Kwinana cobalt-nickel refinery.
These agreements with Iwatani cement the shared strategic vision for both BHCP and the Kwinana Refinery Project and provide a pathway to executing a binding agreement between parties.
“We see strategic value”
Iwatani Australia managing director Kan Ueda said: “Iwatani Australia is pleased to further engage with Cobalt Blue to develop the Broken Hill Cobalt Project.
"We see strategic value in developing a large-scale cobalt mine and integrating this feedstock into the Kwinana Refinery Project.”
READ: Cobalt Blue Holdings names Iwatani Corporation as potential partner in Cobalt Nickel Refinery Project
A binding agreement would align both projects, enabling the refinery to commence and expand production, initially with third-party feedstock (target date late 2025), potentially followed by any BHCP-sourced cobalt intermediate feedstock.
This staged expansion of an integrated BHCP and refinery will potentially create a Top-10 global cobalt refinery.
About Iwatani
Iwatani Corporation, which specialises in the production and trading of commodities, has a global presence with operations in several countries and a market capitalisation of approximately US$3 billion.
They have established partnerships and collaborations with companies worldwide to advance their technology expertise further and explore new markets.
Iwatani also has a large trading arm that procures lithium, cobalt, manganese and other raw materials worldwide for use as cathode material that is supplied to their Japanese partners in major global Electric Vehicle markets, including the United States.
Through its Australian operations, Iwatani has been producing titanium minerals and zircon sand products at its mineral sands operations in Western Australia and is a zirconia producer with downstream processing operations, transforming zircon sand to high-value zirconia products.
Agreement intentions
COB and Iwatani will use their best endeavours to enter into binding agreements on or before April 30, 2026, covering matters such as:
- The establishment of a special purpose joint venture company to own and operate BHCP;
- An investment agreement where the parties agree to provide equity and arrange debt financing required for the construction of BHCP;
- Product marketing and offtake arrangements;
- The determination of the consideration Iwatani will pay to enter the joint venture; and
- The terms for COB’s role as manager of the joint venture and the operation of joint venture operations generally.
“Share common view”
Cobalt Blue CEO Joe Kaderavek said: “Cobalt Blue is excited to have a potential partner of the calibre of Iwatani Corporation.
"We share a common view of Australia as a supplier to the global battery industry and look forward to developing both projects with Iwatani.”
COB will meet the costs of producing a DFS and Independent Expert Technical Due Diligence Report required for consideration by Iwatani.
The parties have also agreed to enter an exclusivity arrangement applying to no later than April 30, 2026, unless terminated earlier by agreement.
BHCP review
In further news, due to the current and near-term metal pricing forecasts, the current size and configuration of the BHCP is presently unlikely to attract project financing.
As such, COB’s board has commissioned a strategic review as part of the BHCP Definitive Feasibility Study (DFS), which will focus on a condensed, higher-margin project with the aim of assessing the viability of a smaller project and provide an option for development if future market pricing persists at subdued levels.
Technical work packages defining the BHCP DFS are nearing completion however, given current battery minerals pricing, particularly cobalt metal trading at US$12–14/pound, as well as the current inflated capital cost environment, the board has decided to undertake a review.
Rather than deliver a DFS that effectively “sits on the shelf”, waiting for a future upturn in the macro environment, the board has paused completion of the DFS and requested management to undertake a review to assess the viability of a condensed higher margin project.
Terms of review
This review will include:
The progressive completion of technical studies supporting the current form of the BHCP will naturally reduce expenditure on external technical consultants.
In addition, staff reductions will be undertaken to create a fit-for-purpose headcount for progression of the BHCP Review, the Refinery Pre-Development Studies and assessment of Cobalt in Waste Streams Projects.
Market rebalance
The global cobalt market is undergoing a period of rebalance as demand continues to expand and the project pipeline normalises.
A supply deficit is expected to emerge from 2027 and past price performance during such phases of imbalance suggests a progressive recovery of cobalt prices.
For the future, COB’s view remains that the cobalt market will tighten and fundamentals will improve, supporting higher long-term sustainable metal pricing compared to current levels.
Refinery program progresses
COB has progressed the Refinery Development Program, sourcing a broad range of cobalt-rich materials representing global cobalt supply, and has begun processing this feedstock to target battery-grade cobalt sulphate.
Testing of third-party feedstock has progressed through to the first large-scale production of cobalt sulphate.
Samples have been produced and these will be evaluated by prospective offtakers, including leading PCAM manufacturers, for initial refinery qualification.
Process optimisation to support detailed engineering design continues, with testing expected to continue through the first half of 2024.
Focus continues on equipment and operating parameters for scale-up to commercial throughputs, reagent and power consumptions, reliability of trace metal removal and development of documentation for commercial operations.
Main image: Cobalt sulphate produced from commercial third-party feedstock.