Cobalt Blue Holdings (COB) - Mining Starts and Demo Plant Produce Bulk Samples

Cobalt Blue Holdings Limited is a cobalt development and energy storage company with a focus on bringing the Broken Hill Cobalt Project into production. The Broken Hill project is located in New South Wales, Australia. The company also seeks to identify and develop other green energy opportunities to expand its strategic cobalt portfolio, which includes battery technologies.

Matt Gordon caught up with Adam Randall, Demonstration Plant Manager, and Joel Crane, Investor Relations and Commercial Manager, Cobalt Blue Holdings.

Mr. Randall has been directly involved in the mining industry and associated mineral processing technology development for over 30 years. During this time, he has worked both within Australia and internationally on gold, copper, zinc, tin, and mineral sands projects, in roles ranging from mining and processing operations to cutting-edge research and development for hydro-metallurgical mineral processing, He has overseen the successful construction and commissioning of several pilot and demonstration facilities, as well as refurbishment and upgrade projects for commercial processing plants.

Mr. Crane has spent the majority of his career specialising in commodity and economic market analysis. His well-earned reputation in the industry has been gained through the ability to translate complex issues into concise conclusions. Joel brings an international perspective to Cobalt Blue. His extensive career portfolio includes 12 years working in top-tier global financial institutions (Morgan Stanley, Deutsche Bank) covering all major metals and bulk commodities - including the key battery raw material.

For the five years prior to joining Cobalt Blue, he was with Rio Tinto (Singapore and Melbourne), where, as a Senior Manager, he led teams within the internal Market Analysis Group that were tasked with conducting and communicating market and business analysis to the executive leadership. In this role, Joel directly supported the CEO with economic and commodity market analysis.

Company Overview

Cobalt Blue is set to become one of the world’s largest ethical suppliers of cobalt, a battery-ready product, for use in utility-scale renewable energy storage, for thousands of home energy storage systems, and millions of electric vehicles. Cobalt Blue Holdings seeks to invest in energy storage technologies that complement the production of cobalt in commercialising batteries and associated energy storage technologies. The company was founded in 2016 and is headquartered in Australia. It is listed on the Australian Stock Exchange (ASX: COB), and the OTC Markets (OTCQX: CBBHF).

Cobalt Blue has been mining a sample from its mine site and is working to process it through the plant in order to generate commercial cobalt samples. The company opened a new mine for all intents and purposes. It opened a single underground drive, where several thousand tons of ore was extracted from the primary ore body at Pyrite Hill. The company is working on crushing and processing the material on the ground to generate a pyrite concentrate feed for its demonstration plant at the Broken Hill project.

As part of the mining operation, a very specific block of ore was extracted to provide a feedstock for the demonstration plant. The theatre operations are planned to be open-cut at a bulk mining scale in the future. The company is looking to generate commercial grade and quantity samples of both the MHP (Mix Hydroxide Precipitate), the primary cobalt product, and high-grade cobalt sulphate, the final refined product. The company intends to send these two products to various battery producers.

Currently, the company has a group of 30 companies and groups around the world that are interested in these samples. The actual sample size will differ based on requirements, but the average sample weight is estimated at 100 kilograms. Notably, for the majority of these groups, this would be the second sample. The first one was a smaller scale sample for the client’s laboratory testing. The company has chosen a sample size that can be integrated into battery manufacturing. As a result, potential clients can use the samples to manufacture the battery and use it for testing and evaluation purposes.

The Broken Hill project is based around a unique ore body that carries cobalt in pyrite. The ore body carries traces of nickel and copper but is largely exclusive of other metals. The company has scaled the mining operation to generate a sufficient size bulk sample that can be used to generate about 500t-800t concentrate as feedstock for a demonstration plant.

The company has plans to bring the mineral from its mine site into town and put it through a small-scale plant. Notably, the small-scale plant is a replica of the proposed full-scale commercial operation that will be operated in years to come from the mine site. As per the company, the scale of the operation is sufficient to generate commercial scale samples for the off-take partners and interested groups.

The demonstration plant features high-pressure vessels that are used to oxidise the iron, making it ready for removal, and ensuring that the finished cobalt product is high in purity. Cobalt Blue has built the plant to be modular. The current plant design is the result of dozens of iterations that went through a process of refinement and optimization. The future pressure vessels are expected to be much larger as the company has plans to scale up the plant’s capacity in the future.

The current demonstration plant will eventually become a test work, a research facility that will enable the company to take packages of ore from other potential projects and run the mineral through the plant in order to understand the viability of process application to other projects. This will enable the company to further develop future cobalt units.

Cobalt Blue has several MOUs (Memorandum of Understanding) in place with a number of companies and mining projects in Australia. It has made significant strides toward generating cobalt from waste streams, which can originate from an existing mine, tailings dams, or other industrial waste streams.

Overall, the company has completed the on-site mining. It has also completed the crushing process to generate feedstock for the on-site plant. The company has plans to process the material outside and develop it into a concentrate. Over the next 3-6 months, the company is looking to complete the operations on a demonstration scale. The process will enable the generation and collection of comprehensive data around the process. This data can be fed into Engineering Studies and Economic Studies for a full-scale project.

Cobalt Blue is looking to make an FID (Final Investment Decision) next year. The current timelines indicate that by 2025-2026, the company will have boots on the ground at the mining site, working on-site establishment, and the initial construction stages.

ESG Considerations

Cobalt Blue has invested significant efforts and resources toward ESG (Environment, Social, and Governance). The company’s model is primarily focused on recruitment from the local community, as it is prioritising a residential workforce. The Broken Hill project has a long history oriented around mining. In fact, it is the primary industry in town. Since the local community cannot fulfil all the workforce requirements, the company will need to bring additional hires to the project site. It has a current workforce of 40 employees and over the next 2-3 years, it is looking to increase the force to 400.

Cobalt Blue has received a positive response from the local community. The large-scale plan is located 25km out of town. Despite the distance, the plant provides support for all the local industries in town including engineering, steel, fabrication, electrical supplies, engineering supplies, and more. The company has been successful in garnering strong local support. The local community is positively disposed toward the project.

According to the company, the circumstances around the Broken Hill project are quite unique. It is a project that is at the right place at the right time. A major portion of the local community has worked or is related to someone who has worked in the mines. On the macro scale, the New South Wales Government is strongly disposed toward the project’s development. Interestingly, the Broken Hill project has received critical major project status from the Federal government. It has been recognized by another Federal government program, called the Minerals Accelerator Initiative.

The local government has shown extensive support for the development of the project’s scale in the community. It is expected to generate between $50M-$60M in annual salaries for the community. The project is a massive boon for Broken Hill, which is an outback city. The local community, the industry, and service providers in the region are looking forward to the project coming to fruition.

Operational Challenges

Cobalt Blue hasn’t faced any challenges from a project perspective. However, the company did face difficulties previously at the pilot scale, where it had problems in sourcing small-scale equipment.

The company’s ore is amenable to being processed and it has a very low-cost upfront process to generate the concentrate or feedstock for the plant. Each unit in operation in the plant is based on conventional and proven processing technology. The individual modules of the process have been cobbled together in a unique way. The pilot plant operation has been highly successful so far. The company has generated some very high-quality samples at a smaller scale, this, in turn, has generated enthusiasm to develop larger-scale samples from the existing demonstration plant. The company is cognizant that as the plant operations scale up, the type of challenges will change, especially on the technical front.

Ongoing Operations

The section of the ore body that was targeted is reasonably representative of the rest of the ore body. A major advantage of the chosen location is that the material is located a few metres from the surface. This has enabled the company to intersect the ore body at a 30m-40m depth at a 5-degree incline, as opposed to drilling massive deep lines underground. The decline is 100m long. The underground development had a very short timeline and provided a very good ROI (Return on Investment).

Currently, the company is mining and processing the ore from the project site. The company has demonstrated its ability to commercial partners in upscaling operations from last year's pilot plant by developing large bulk samples. These samples can be directly utilised by potential commercial partners to manufacture a battery for quality and testing purposes.

The company has gained recognition from the government and international commercial partners. It has been able to showcase the support along with a working process in place. This can lead to higher prospects for commercial negotiations for off-take agreements and partners.

Cobalt Blue is in a very advanced stage of the project through its DFS (Definitive Feasibility Study), which is expected to complete by August 2023. 3 big-name engineers are aiding the company with the DFS and the permitting process. At the same time, the company is gathering extensive data and performance measurements for the various processes. Once the DFS is published, it will serve as an assurance to the market that the company is on its way to becoming the only cobalt refinery located outside of China. The company is looking to enter production by 2025-2026.

The Market Landscape

According to Cobalt Blue, the procurement clients are approaching battery manufacturers that have mandates over the next 5-10 years. The cobalt market is currently in a tight position. This market situation also extends to premium cobalt products, which are produced outside of China and the DRC (Democratic Republic of Congo).

Following the recent announcement of the Inflation Reduction Act by the United States, companies can now gain incentives for producing cars that are sold in the US. In order to gain the incentives, a certain percentage of the inputs in developing the car should come from an FTA (Free Trade Agreement) friendly countries such as Australia or Canada.

To find out more, go to the Cobalt Blue website