Cobalt Blue Holdings Ltd (ASX:COB, OTC:CBBHF) is positioning to play an important role in Australia’s critical minerals future with its cobalt supply strategy that incorporates a Cobalt Nickel Refinery Project it plans to establish in Western Australia.
The state will be a lynchpin of the national strategy with the successful development and operation of the refinery to cement Western Australia at the forefront of Australia’s efforts.
READ: Cobalt Blue achieves 95% to 97% metal recoveries for Cobalt Nickel Refinery Project; secures WA Premier’s support
Underlining the significance of the refinery project planned for Kwinana Industrial Area, south of Perth, Western Australian Premier Roger Cook has expressed strong support, saying the refinery solidifies WA as a "national battery material production hub" and strengthens its critical minerals processing capabilities.
He added that the successful development and operation of the refinery “will further cement Western Australia at the forefront of Australia’s efforts to develop sovereign capability in the advanced processing of critical minerals and diversify the critical mineral supply chains of strategically aligned countries”.
In this Q&A with Proactive, COB’s investor relations/commercial manager Joel Crane explains progress with test-work, how this aligns with the company’s cobalt supply strategy incorporating the proposed refinery and the state of the cobalt market.
In your most recent market update, you discuss ongoing test work of third-party feedstock – why is this important?
The first stage of the refinery will treat cobalt intermediates from a couple of different sources.
Even though the global hydroxide market consists of relatively standardized products, there are several factors we need to evaluate in order to provide the necessary confidence to our partners that we can successfully produce high-quality sulphate.
Cobalt solvent extraction strip cell.
These include leaching extraction of cobalt and nickel, trace metal purification and ultimately separation of cobalt and nickel sulphate crystals.
We are currently testing two, 5-tonne lots from separate sources, with initial results confirming up to 97% cobalt extraction has been achieved on a continuous basis. Once testing is complete, we will use these samples to further offtake negotiations.
Solvent extraction and cobalt sulphate crystallizer.
Included in this announcement was a Letter of Support from the WA Premier, Roger Cook. Clearly the Cobalt Blue refinery has captured the government’s attention?
It certainly has, and for several important reasons.
Our refinery is perfectly aligned with WA’s Battery and Critical Minerals Strategy as well as the Diversify WA Economic Development Framework.
The State Government is establishing itself as a national battery materials production hub, which of course makes sense given all of the key ingredients to lithium-ion batteries are produced there.
District view of the proposed refinery project site.
Within the State’s Strategy and Framework is the goal of developing sovereign capability in processing critical minerals to diversify the global supply chain.
Our refinery represents the first large investment in cobalt sulphate capacity built outside of China for around three decades.
Furthermore, given the current economic climate in which a number of existing producers are struggling, the State Government is keen to support new projects that will provide jobs as well as battery raw materials.
The proposed refinery site location in Kwinana Industrial Area is owned and operated by your partner in the project, Iwatani Australia. What are the key benefits of co-locating on their existing site?
Iwatani Australia has been operating the Doral Fused Materials plant since the 1990s. Partnering with an existing property owner on an operational site is highly desirable because of the ready access to power, utilities and infrastructure as well as favourable industrial zone policy settings and regulatory environment.
The area itself also has the benefit of close access to reagent suppliers, access to an experienced workforce and proximity to Fremantle Port.
These advantages will accelerate the development timeline relative to a more greenfield project.
Construction should begin by the end of this year and first production in late 2025.
What capacity are you expecting the refinery to have in 2025?
Stage One will have a capacity of 3,000 tonnes of cobalt sulphate and 1,000 tonnes of nickel sulphate, metal equivalent. That would immediately place us as one of the largest producers of battery-grade cobalt sulphate in the world – outside of China.
Stage Two, which will bring in feedstock from the Broken Hill Cobalt Project, will essentially double the initial capacity and propel Australia into a top-three global cobalt producer.
Cobalt sulphate.
Cobalt hydroxide.
Last year proved to be challenging for the cobalt price, when can we expect the cycle to turn?
Despite the decline in prices, global demand for cobalt actually had a stellar year in 2023. Cobalt consumption grew 15% versus the previous year on the back of a rise in EV sales from 10.5 million in 2022 to 13.8 million units.
Unfortunately, the cobalt market is also experiencing a period of extraordinarily high supply growth. Global output grew 17% in 2023, led by a massive 25% jump in DRC supply.
The current price reflects this temporary supply and demand imbalance.
Cobalt demand supply vs supply.
However, these dynamics are beginning to shift. Already this year, a number of supply side adjustments have been announced and we wouldn’t be surprised to see more in the coming months.
Supply growth this year is likely to drop below the level of demand growth and remain so for the foreseeable future as the project pipeline normalises.