EDITOR: | March 11th, 2016 | 8 Comments

Cobalt: the backstory of a technology metal

| March 11, 2016 | 8 Comments
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cobaltIt has certainly been cobalt’s week. John Petersen has authored two imposing posts (PT 1, PT 2). Now Christopher Ecclestone has underlined the worries that should be concerning Tesla and other end-users about the possibility that the supplies of lithium and cobalt on which they are depending for their lithium-ion batteries might just not be there when they put in their orders (and he cites the fact that London Metal Exchange warehouses have just 614 tonnes of cobalt in their care).

This is a very important story for InventorIntel given that cobalt is being seen increasingly as a technology metal and a “green” one, the latter reflecting its battery applications.

There is an additional consideration: the availability of cobalt for batteries is complicated by (a) the looming shortage of the metal and (b) the competing demand for it. While projections for 2018 show that battery chemicals will require 49% of cobalt output, the metal is also needed for superalloys, hard metals, ceramics and pigments, catalysts, tyres and paint dryers, electroplating, animal feed, synthetic diamonds and other battery technologies (AlNiCo, SmCo, NdFeB).

However, apart the present and the future, there is also the past. As it looks certain that cobalt is going to figure prominently on InvestorIntel as the battery issue heats up, some backstory may be useful to readers.

Technology metal now, strategic metal then.

In 1952 the US Government was very concerned about cobalt, which was then – as it is about to become from 2017 onward unless some new mines are opened quick-smart – in acute short supply. The metal was vital for jet engines and electronic devices, and for use in magnets (yes, even 64 years ago) and machine tools. Washington was heavily dependent for its cobalt supplies on the then Belgian Congo (later Zaire, now Democratic Republic of Congo). Consumption of cobalt had risen by 20% in 1951. At the end of 1952 the government set its 1955 target of cobalt supply at 12,250 tons, more than two and a half times the amount needed in 1950 (before the rearmament was accelerated during and after the Korean War).

The Korean War had led to the hurried building by 1951 in Cobalt, Idaho, of a cobalt mine along with a refinery at Garfield, Utah. In 1959 these closed after the government failed to renew a contract, and would not heed the call by the companies involved to lift tariffs on imported cobalt. In 1961 the National Lead Company ended its cobalt production from a mine at Fredericktown, Missouri.

By 1962 The New York Times was reporting that the US Government’s stockpile of cobalt was six times the original goal. The Congo was still an important supplier, but Washington had also sponsored loans to companies in Northern Rhodesia (now Zambia) that were repayable in copper and cobalt. The price of cobalt had gone from 1.50/lb in 1947 to $2.60 in the mid-1950s. By 1960, as the US now longer needed to add to its stockpiles, the price had reverted to $1.50/lb.

Fast forward to 1979. Katangan rebels seized Zaire’s cobalt-rich Shaba province, a development that sent the metal’s price to $51/lb. The Wall Street Journal reported this had “led to a flurry of plans for new mines and for improved recovery of strategic metals from ores”. The focus was looking at how Zambia could become a substitute for supply from the Congo. Inco in Canada and Finland’s Outukumpu were trying to raise cobalt output, while France was looking how it could increased production from its laterite nickel deposits in New Caledonia. In South Africa Rustenburg Platinum was investigating how it could produce cobalt sulfate. Rolls-Royce, which needed the cobalt for its airliner engines, was looking to recycle cobalt.

In 1980 The Christian Science Monitor was reporting about concerns over the vulnerability of the US to the cut-off of strategic metals. Noranda Minerals was talking about reopening the Blackbird mine in Cobalt; the company brought in 125 miners and some geologists to run tests to see whether the reopening was feasible.

With the settlement of problems in Zaire, urgency once again subsided.

But interest rose again in 1995 when the cobalt price surged from $10 to $28. There was talk that Australia was to triple its output. At that stage the country’s biggest producer was Western Mining Corp (later taken over by BHP Billiton) which was producing 1,100 tonnes a year from its nickel mines in Western Australia.

Now, in 2016, we may be on the brink of another cobalt frenzy.


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Comments

  • Peter

    Do Tesla’s SEC filings make accurate disclosure of these supply chain challenges?

    March 11, 2016 - 11:01 AM

  • Janet

    Absolutely loved that you provided cobalt’s history, thank you. Been readying so much of late here on InvestorIntel about cobalt and now I feel like I have some context. Always enjoy your articles.

    March 11, 2016 - 1:35 PM

  • Ian Pringle

    Interesting account of cobalt history – thank you Robin.
    I cannot agree more with your punch line “we may be on the brink of another cobalt frenzy”.
    There are very few deposits with cobalt as the main metal rather than a by-product. My company is exploring one of these – a potentially very large cobalt deposit near Broken Hill (Broken Hill Prospecting Ltd, (ASX:’BPL’) where cobalt occurs within pyrite horizons within a very large resource. Future mining could be an interesting combination of cobalt and sulphuric acid. The latter has huge local market potential for phosphate and metals processing.

    March 11, 2016 - 6:17 PM

  • Craig

    Hi Ian, What long term Cobalt price would you need to get your Broken Hill project off the ground?

    March 11, 2016 - 7:18 PM

  • Bob

    Ian how much capital needs to be spent to build the broken hill project?

    March 11, 2016 - 8:28 PM

  • Ian Pringle

    Craig, our concept is to produce a pyrite-cobalt concentrate which can then be processed via metallurgical roasting to produce sulphuric acid and electricity (the reaction is exothermic and produces heat to generate steam for power generation). The cobalt is retained in high iron ash residue from which it can be recovered by solvent extraction. The remaining hematite rich ash can be used for cement or steel.
    To answer your question, cobalt price is probably not relevant because much of the capital and operating costs will be governed by scale of the sulphuric acid plant and market for the acid.

    March 12, 2016 - 3:27 PM

  • Ian Pringle

    Bob, we need to complete feasibility studies to provide a better understanding of capital costs. These will likely require an ~$10m spend to undertake step up metallurgical testing, better resource definition etc. and we are seeking a partner to help with this.
    Capital costs for project will depend on optimal size, location of acid plant, freight etc. For example, The project could produce a pyrite cobalt concentrate at mine site and freight this by rail to an acid plant located at the location the acid is used. Clearly it will be much lower cost for freight since liquid concentrated acid and sulphur can be expensive to transport and store. Cobalt rich ash can then be processed at the acid plant or returned to minesite. Capital costs will be different for these scenarios and may also be offset by off-take sale of the acid or third party construction/operation of the acid plant.

    March 12, 2016 - 3:45 PM

  • Romiya

    Hello Ian, thank you for your insights, been looking at your company for a time now. My question is, under assumption that the DFS and financing was taken care of, what is your estimate for the time necessary for the facility at Broken Hill to be able to produce pyrite cobalt concentrate. I know this depends on a number of factors, I just need an estimate how long it would take to bring such an operation online.

    April 9, 2016 - 6:43 PM

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