Cobalt Blue Holdings Ltd (ASX:COB, OTC:CBBHF) has passed a number of recent milestones in its quest to develop a Cobalt Sulphate Refinery, the first in Australia, with workstreams on track for a Q3 2024 decision to proceed to construction.
The milestones include processing of large-scale feedstock samples sourced from third parties, while potential offtake partners have begun to assess larger-scale sulphate samples produced from these sources.
Detailed engineering design has also commenced while permitting is on target for submission in mid-2024.
Cobalt Blue CEO Joe Kaderavek said, “The refinery project development is progressing well, and we remain on pace to see construction commence by the end of this year.
“There is significant interest from WA State and Australian Commonwealth governments, along with international commercial parties in the emergence of a new midstream critical mineral capacity in Australia for the global battery supply chain.”
The company’s Cobalt-Nickel Refinery Study has presented a compelling evaluation of a refining business that is expected to generate stable margins throughout the highs and lows of the cobalt price cycle.
Test work
Cobalt Blue has secured 10 tonnes of feedstock from global third parties for trial at its demonstration plant in Broken Hill.
Work continues to optimise the key unit operations, including leaching; trace metal removal; cobalt separation by solvent extraction; cobalt sulphate crystallisation; and nickel recovery.
Engineering
The company has commenced the detailed engineering design and will complete the process engineering design package.
It will engage external consultants for civils, structural, electrical and instrumentation design. Efforts continue to select the preferred construction and management partner for the project.
The proposed refinery site at Kwinana, adjacent to Doral Fused Materials operation.
Feed supply
COB is aiming to execute initial feedstock contracts by mid-2024.
Supply must adhere to strict criteria and COB will only source from suppliers that do not contravene USA Foreign Entities Of Concern (FEOC) definitions; meet appropriate environmental and labour standards; and permit traceability/authentication to validate origin and supply chain custody.
Offtake contracts
COB is aiming to secure initial offtake contracts by mid-2024.
A key risk for offtake contracts is validating these high-purity chemicals into the manufacturing supply chain.
Existing relationships with precursor cathode active material manufacturers will help optimise product specifications including contaminant trace metals, physical handling and moisture content, logistics supply and product storage requirements.
Strategies are being developed to streamline validation once the Cobalt Sulphate Refinery Project plant has been constructed.
COB continues to develop a relationship with Iwatani Australia and will jointly market the Cobalt-Nickel Refinery at the upcoming Cobalt Institute conference in New York from May 13-14, 2024.
IRA-compliant material – deficit emerging
Cobalt Blue is targeting both the US Inflation Reduction Act and EU Critical Raw Materials Act compliance for its products. The company believes that the timing of the Refinery Project is ideal as US/ EU market demand will hit an inflection point in the coming years.
In the US, FEOC exclusion criteria are set to be applied from January 1, 2025, with any FEOC material content to effectively exclude the Electric Vehicle maker from any benefit under the IRA.
According to the company's analysis, from 2026, only 55% of the US supply requirement will be compliant – and this share will decline as EV sales grow.
Cobalt sulphate supply vs North American demand.
During the second half of this decade, global cobalt demand growth will exceed supply growth for the foreseeable future.
Cobalt output has grown significantly as a result of a deep pipeline of operational expansions and greenfield development in the Democratic Republic of Congo and Indonesia.
Global cobalt supply by source vs demand growth.
As this growth eases, a steady demand growth profile will likely create substantial market deficits and bring cobalt prices back over time to long-term averages.
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