ASX-listed Cobalt Blue Holdings has signed a term sheet for the sale of standard-grade cobalt metal rounds to Swiss metals trader STG Metals.

The material will be produced at Cobalt Blue's proposed Kwinana cobalt refinery, in Western Australia, with the refinery's Stage 1 production capacity planned to be 3 000 t/y of contained cobalt.

The production will comprise about 1 000 t/y of cobalt metal and 2 000 t/y of cobalt contained in sulphate.

Kwinana is expected to be Australia's first dedicated mid-stream cobalt refinery, producing refined cobalt metal for advanced manufacturing and defence applications, and cobalt sulphate for the battery supply chain.

The proposed commercial terms between Cobalt Blue and STG remain bon-binding and subject to definitive negotiations.

The term sheet nonetheless represents a significant commercial milestone for Cobalt Blue in establishing an offtake pathway for its cobalt metal product and building confidence towards a final investment decision (FID) on Kwinana.

The term sheet provides for a term of three years from commercial operation, with the option to extend for a further three years, for supply of between 500 t and 750 t in year one and between 800 t/y and 1 000 t/y in years two and three.

Cobalt Blue CEO Dr Andrew Tong comments that combined with the company's binding feedstock agreement with Glencore and product qualification work at the Broken Hill Technology Centre, Cobalt Blue is continuing to build the commercial foundations required to support an FID. 

The refinery is to be developed on the site of Iwatani Australia's Doral Fused Materials facility, which is a brownfield industrial site with existing infrastructure, services and direct proximity to the Fremantle port.

Cobalt Blue already has a works approval from the Western Australian government in place to construct and operate the Kwinana refinery on the site.

Meanwhile, Cobalt Blue's Broken Hill Technology Centre has successfully produced both cobalt metal and cobalt sulphate at pilot scale, with product quality having been confirmed against market specifications.