The unfolding energy storage boom is a long way from slowing down and has grown from lithium to other battery metals such as cobalt. The demand for cobalt is projected to grow strongly for years to come and prices for the metal have more than doubled in the last two years – from US$10 to US$25 per pound or about US$55,000 per tonne, an eight year high. All this has prompted a boom in listed cobalt stocks through IPOs and other mineral companies dusting off and polishing up their old cobalt resources.
Until recently cobalt has been an important but little known part of battery based energy storage. Cobalt’s key role is in the cathode. The cathode and the anode are the two electrodes in a battery between which the electrical current flows. Lithium batteries are said to contain more cobalt than lithium, with the active part of the cathode up to 60 per cent cobalt. In much lesser quantities, cobalt is also used in nickel-cadmium and nickel-metal hydride batteries. In rechargeable batteries cobalt is important for conductivity and energy density, and it also adds to safety and longevity.
Cobalt is seen as crucial to the future of battery based energy storage, and the main driver of medium and long term demand is expected to be electric cars. But supply has been a major issue as just over half of the world’s supply comes from the Democratic Republic of Congo where there are political instability and ethical sourcing issues. Another dozen countries including Australia supply the balance but all of these are small producers as the cobalt is a byproduct of mining other minerals such as copper and nickel.
The big producers are Glencore with 10 per cent of the market, Freeport McMoran 9 per cent, and Umicore and Sumitomo with 6 per cent each. Many smaller producers make up the rest including Chinese state industries that refine cobalt from ores. A number of cobalt miners and explorers are listed in the US and Canada, as well as Australia.
True to form, Australia’s speculative mining sector has spotted the opportunity and been quick to ramp up exploration and production. The list of these ASX cobalt aspirants is now quite long, about 22 at last count. All are speculative investments with their cobalt businesses at an early stage of development. Before we take a look at two that are pure plays, it is worth noting that among them are three stocks followed by Eco Investor are in the early stages of developing a cobalt business. These are Clean TeQ, Australian Vanadium and Neometals.
Clean TeQ Holdings
Clean TeQ is developing its Syerston nickel, cobalt and scandium mine in outback NSW. The company says this is Australia’s largest undeveloped nickel/ cobalt resource and the cobalt grades mean it could become one of the largest global suppliers of the metal outside of Africa. The plan for cobalt is to target the supply of cathode raw materials to the lithium-ion battery industry.
A Nickel/ Cobalt Project Prefeasibility Study is assessing the potential for a 1.5-2.5 million tonne per annum mine to produce high purity nickel sulphate and cobalt sulphate products. The project has the potential to generate significant scandium as a by-product.
The company says "Syerston’s high cobalt grades, combined with Clean TeQ’s proprietary ion exchange technology to produce the specific cobalt and nickel sulphates required by lithium-ion cell manufacturers, positions the company to benefit from strong forecast growth in demand for lithium-ion batteries."
But developing the mine will involve a huge capital cost, $906 million at the last estimate. So an investment in Clean TeQ is speculative and far from a cobalt pure play as the company is aiming to supply scandium for light weight alloys in the transport sector, nickel and cobalt for the lithium-ion battery market, and is developing a wastewater treatment business in China. (ASX: CLQ)
Australian Vanadium is a vertically integrated vanadium miner and vanadium battery supplier, it has a lithium-tantalum subsidiary, and is looking to add cobalt to its battery minerals. Its Gabanintha Vanadium Project near Meekatharra in WA, said to be among the highest grade vanadium projects in the world, also has cobalt. The company says there is an increase in demand from consumers for ethically sourced cobalt. It plans further modeling and evaluation of the cobalt resource and its potential at Gabanintha. So the project is at an early stage, and the company is not a pure cobalt play. (ASX: AVL)
Neometals is a lithium miner, technology developer and an aspiring recyler of cobalt from consumer electronics batteries. The company has co-developed a technology to economically recover 99.2 per cent of the high value cobalt so it can be recycled into battery making. Over half of lithium ion batteries contain lithium cobalt chemistry, it said, but currently less than 5 per cent of used lithium ion batteries are recycled. Disposal is usually by paid-for recycling or landfill. Neometals’ subsidiary, Urban Mining Pty Ltd, holds its interest in the intellectual property and manages the commercialization of the technology.
The next step is a pilot scale continuous operation hydrometallurgical plant to evaluate the recovery of high purity cobalt and the future recovery of lithium, nickel, copper and aluminium. If that works, a feasibility study will follow. (ASX: NMT)
Cobalt Blue Holdings Ltd listed on the ASX in January after raising $10 million at 20 cents per share. It listed with 72,325,316 shares, giving it a market capitalization of $14.4 million.
Cobalt Blue is focused on developing its Thackaringa Cobalt Project near Broken Hill in NSW. Chairman Robert Biancardi says the company has the team and the strategic relationships to become a leading cobalt producer.
The company began last year as a subsidiary of Broken Hill Prospecting Ltd, and an in specie distribution of shares means BPL shareholders had 35 million of the shares post IPO. BPL has a farm-in joint venture agreement with Cobalt Blue which means it will initially acquire 51 per cent of Thackaringa. An exploration and development drilling program are planned and if exploration milestones are met Cobalt Blue will progressively acquire 100 per cent of the Project.
The IPO capital is helping to pay for the exploration and drilling program and technical studies to assess the commercialization of the cobalt. The company is also looking at acquiring new exploration areas, and perhaps investing in rechargeable battery and energy storage technology.
The company says it has one of the largest cobalt exploration programs on the ASX, and is looking to increase the inferred resource at Thackaringa from 27,500 tonnes of contained cobalt to over 88,000 tonnes. The operation will be pure cobalt with no other minerals, which the company says gives it the strongest leverage to cobalt among all ASX stocks.
Thackaringa is put forward as a large and clean ore body that can be mined at low cost. The company plans to have a scoping study by June this year, followed by an indicative feasibility study by June 2018, a bankable feasibility study and project approvals by June 2019 and project finance and a decision to mine by June 2020.
Post IPO, Cobalt Blue’s shares have traded above the 20 cents issue price and peaked at 39.5 cents before settling back to the low 20 cents range.
Cobalt Blue is a pre-revenue business and will likely need to raise further capital down the track. (ASX: COB)
Equator Resources is an explorer focused on cobalt. The company has four mineral assets in the cobalt region of Ontario in Canada that it is now exploring. Historical samples have shown grades of up to 12.3 per cent cobalt. The region is established with export infrastructure and previous cobalt and silver mines.
The assets are the Cobalt Town Project, the Silverfields Project, the Silver Centre Project, and the Lorrain Valley Project. Some of these are also prospective for silver.
Meanwhile, the company is one of the few cobalt pure plays on the ASX. Its assets have potential but its exploration days are early and the company is a long way from being a producer. (ASX: EQU)
A brief summary of the other cobalt plays is at http://www.ecoinvestor.com.au/Stories/Features-Opinion/Cobalt-and-the-Battery-Boom.htm