This article is a sponsored feature from Mining.com.au partner Cobalt Blue Holdings Ltd. It is not financial advice. Talk to a registered financial expert before making investment decisions.
Can Australia provide a solution to the global battery market’s increasingly grim problem with ethical supply chain sourcing? One New South Wales miner thinks so.
Cobalt Blue (ASX: COB) is a pure-play exploration and project development company focusing on commercialising its Broken Hill Cobalt Project, the largest greenfield source of the key battery metal outside of Africa.
Located 25km southwest of its famous namesake town in far west New South Wales, the project is set to launch an integrated mine and processing facility which would inject high-grade, battery-ready cobalt sulphate directly into the production chain, completely bypassing ESG pressure points in central Africa and China.
At full production, the project is expected to produce 16,700 tonnes of cobalt sulphate per annum, enough to power around 300,000 standard electric vehicles. That’s over 5 million electric vehicles over its operating life.
Cobalt vital component for booming battery production sector
Cobalt is a strategic metal used in new-generation lithium-ion batteries. The metal delivers higher energy density, enabling batteries to hold more charge, and are also generally maintenance-free.
Today, a range of key products are powered by cobalt-based lithium-ion batteries, including smartphones and tablets, laptops, electric vehicles, solar-powered home battery systems and utility-scale renewable energy storage.
Thanks to tailwinds from the Paris Agreement, strong growth is anticipated in the renewable power and battery sector to achieve a global temperature target of 1.5-2°C, with decarbonisation of power grids playing a vital role in meeting goals.
“The global cobalt supply/demand balance appears to be set for tight conditions in the coming 5 years.”
As the world rapidly adapts to renewable energy, there has been a significant uptick in the demand for cobalt.
Cobalt Blue CEO Joe Kaderavek explains: “The global cobalt supply/demand balance appears to be set for tight conditions in the coming 5 years. Last year, demand surprised to the upside, primarily due to stronger-than-expected EV sales following government support initiatives. EV demand remains robust, even as government subsidies are gradually withdrawn. Further, supply risks far outweigh those for demand given 75% of the supply growth scheduled in the next 5 years comes from the Democratic Republic of Congo (DRC).”
It is estimated that Nickel Manganese Cobalt cathodes, the technology of choice for EV batteries due to superior energy density and stability, will account for 85% of the total EV market by 2030, with 2,000 GWh of demand forecast.
Due to supply chain concerns, substitute technologies have been developed, however mostly with loss of performance.
Solving the battery supply chain’s most pressing issue
Cobalt supply, once the battery manufacturing industry’s ‘dirty little secret’, is now front and centre, and demanding real action.
Sourcing of the metal has long been plagued with social problems, with a sizeable percentage of production coming via small-scale artisanal mines in the DRC that potentially employ child-labour practices.
The DRC, one of the worst-ranked countries among the Human Freedom Index at #147, accounts for over 70% of raw cobalt output globally, with between 15% to 30% suspected to have origins in these artisanal mines.
“Broken Hill cobalt products will target ethical cobalt demand, guiding the industry towards sustainability.”
Severe human rights issues have been documented in these operations, with fatal accidents and violent clashes between miners and security personnel.
In addition, China accounts for around 70% of downstream cobalt sulphate output, causing concern for supply-chain security due to geopolitical frictions.
The increasing demand for ethical, reliable, large-scale and long-life cobalt production presents a compelling opportunity for local producers.
“Even though ~70% of global cobalt mined supply comes from the DRC, an even larger proportion of DRC material is present in rechargeable batteries. DRC output is then sent primarily to China for refining/processing. Cobalt Blue will mine/refine Australian material into a battery-ready product using global best practices. There is strong demand for cobalt sourced ethically, which will put pressure on other miners to do the same while also attracting other, more responsible entrants to the market.”
Australia holds more than 16% of global cobalt resources but produces only 6% of supply. Cobalt Blue has formulated an ambitious plan to close this cobalt resource-supply gap and become the world’s highest-volume producer of ethical cobalt, and a pioneer for Australia’s domestic battery industry.
The Broken Hill Cobalt Project
Cobalt Blue’s flagship Broken Hill Cobalt Project (BHCP) covers an area of roughly 37km² within a broader tenement holding of almost 220km².
It comprises three major cobaltiferous pyrite deposits, Railway, Big Hill, and Pyrite Hill, with a combined Mineral Resource Estimate of 118 Mt @ 859 ppm cobalt-equivalent for 81,100 tonnes contained cobalt, (at a 275ppm CoEq cut-off).
The BHCP is an integrated mine-refinery concept, which will soon see the launch of a demonstration plant as it moves towards commercial production.
A pilot plant was commissioned in early 2021 to replicate the process of extracting cobalt from pyrite. This resulted in the production of high-quality Mixed Hydroxide Product (MHP) samples that were delivered to nearly 30 sample partners across various battery-industry sub-sectors, with positive feedback received.
The focus has now shifted toward constructing and operating the larger-scale demonstration plant which will optimise Cobalt Blue’s proprietary processing technology, producing both MHP and cobalt sulphate (CoSO4).
“Construction of the demonstration plant & on-site concentrator is currently underway. A box cut will be made into the resource to collect 3,000 tonnes of ore from multiple areas within the deposit to provide a sample representation for the demonstration plant. This will give us enough material to run 24/7 for ~20 weeks to produce bulk samples. The subsequent performance and engineering data will put COB in a strong position for offtake discussions.”
The demonstration plant is expected to be operational by Q2 2022, and will result in around 3,000kg of cobalt product output.
Engineering design data from the plant will also be used as part of an upcoming Feasibility Study, due in late 2022.
The BHCP enjoys a mining-friendly environment with the presence of extensive infrastructure including access to road and rail. The project is also proximal to a dedicated water supply, power, and even potential sources of wholesale reusable energy from AGL’s nearby Broken Hill Solar Farm, along with the Silverton Wind Farm.
The project is expected to produce 16,700 tonnes of high-purity cobalt sulphate per year, with an operating life of 17 years.
BHCP secures government recognition
On the 2nd of March 2022 it was announced that the BHCP had been granted ‘Major Project Status’ by the Australian Federal Government in recognition of the key role that it is set to play in the burgeoning battery industry.
The announcement, which underlines the project’s importance, will bring a number of benefits including fast-tracked approvals and easier access to capital markets for raising funds.
“Granting Major Project Status to the Broken Hill Cobalt Project will greatly assist COB to raise development capital by recognising the strategic importance given to this Project by the Australian Government. This milestone is critically important for overseas partners and well timed in our development journey. COB can now boast both Made in Australia and Backed by Australia.”
“This mine will not only help the surrounding regional communities in and around Broken Hill, it will also help power the growing battery industry and reduce emissions”
The Australian Federal Minister for Industry, Energy and Emissions Reduction Angus Taylor added: “The Broken Hill Cobalt project’s pilot plant has already produced samples for shipping to battery precursor manufacturers across the country and the world – and now we’re helping to supercharge its potential.
This mine will not only help the surrounding regional communities in and around Broken Hill, it will also help power the growing battery industry and reduce emissions.”
In a further development, Cobalt Blue has secured an MOU with the Queensland Government to assess opportunities to recover cobalt from mine waste. The agreement, which falls under the New Economy Minerals Initiative, will see COB undertake testwork to evaluate mineral processing options, including the use of its own proprietary technology, to recover cobalt from feedstock provided by the Department of Resources.
Environmental benefits key to project
Cobalt Blue is developing the BHCP to minimise its impact on the environment, and is aspiring to operate mine and refinery operations according to best environmental practices.
The company has successfully developed a unique processing technology for recovering cobalt from pyrite, with a 2018 pre-feasibility study reporting cobalt recoveries of 85–90% from ore to final cobalt sulphate products.
Importantly, the company’s process separates over 80% of the waste from the ore at the first step. This means that less than 20% of the material brought out of the ground will need to be refined.
To manage its bulk waste streams, the company is adopting an Integrated Waste Landform (IWL) approach, which will minimise acid generation through careful engineering and management of the waste rock.
These IWLs are progressively rehabilitated to produce a long-term stable structure that takes the form of the surrounding landscape.
The company has also adopted the Cobalt Industry Responsible Assessment Framework (CIRAF), developed by the Cobalt Institute as a means of assessing and implementing global best practice standards.
The inaugural assessment indicated that Cobalt Blue has appropriate corporate policies and practices in place to meet requirements to address operational risk areas.
Strengthening ties with the Broken Hill community
The BHCP is expected to generate 450 construction jobs, with a further 400 operational roles during over 17 years.
“We are overwhelmed by the local support we are receiving for the BHCP. Council, community, leaders of industry, community groups, and businesses want the BHCP to proceed on socio-economic grounds. The BHCP will provide direct jobs and facilitate economic growth. It will enable training and education to develop a locally sourced workforce, and it will attract new residents to put a halt to the trending decline of Broken Hill’s population. Currently, BHCP employees 16 locals, with another 17 positions under recruitment. All up, when the mine and refinery is in full-swing we are talking about 400 jobs and that translates to a massive economic boost for Broken Hill.”
The company is also focused on developing a Cultural Heritage Management Plan with representatives of the local Aboriginal people to appropriately manage artefacts present on the site.
Registered Aboriginal Parties and professional archaeologists have currently commenced Aboriginal heritage investigations at the Broken Hill Cobalt Project site. Further Aboriginal heritage survey and assessment are also planned during the preparation of the Environmental Impact Statement.
Experienced leadership guides growth
Key to Cobalt Blue’s success is its leadership team, which provides the depth of expertise required to drive the BHCP to production and beyond:
Independent Chairman – Robert Biancardi
IBM, Citibank, Westpac and Evolution Healthcare (senior management and director). Numerous directorships of private companies.
Independent Director – Hugh Keller
Partner Blake Dawson (now Ashurst) and its predecessor firms for 35 years until retirement in 2010. Non-executive director of two other companies.
Independent Director – Rob McDonald
40 years of international mining sector experience, Investment banking/private equity investment management.
Chief Executive Officer – Joe Kaderavek
Equities research lead / investment management, resources and energy storage technology focus. Operational reviews and strategic assessments – mining, minerals processing (BHP, Rio Tinto) and infrastructure in Australia, North America and Europe.
Executive Manager – Dr Andrew Tong
Metallurgist with +15 years experience in project development, operating mining and processing activities, and patenting innovative minerals processing technology.
Chief Financial Officer – Danny Morgan
Chartered Accountant with +25 years’ professional financial and commercial resource sector experience including IPO’s, M&A, Project Financing, JV’s and Project Developments.
Investor Relations – Joel Crane
Commodities economist with +15 years experience analysing bulk, base and precious metals in global investment banks and major resource company (Rio Tinto).
2022 shaping up for success
2022 is set to be a milestone year for Cobalt Blue. In parallel with the Demonstration Plant operations, the company will continue to progress the remaining technical and environmental work programs associated with the Feasibility Study over the course of 2022. Commercially, Cobalt Blue remain in discussions to identify a project partner for the BHCP.
Chairman Rob Biancardi sums up: “Our plans reflect a strong belief that cobalt prices will continue to strengthen over the coming few years. We intend to be well positioned and ready at a time the cobalt market will require the development of a major new cobalt mine, in a low political risk jurisdiction with well-established infrastructure.”