Development-stage mining company Fortune Minerals’ Nico cobalt/gold/bismuth/copper project, in Canada’s Northwest Territories, is one of the few cobalt development stage projects situated outside the Democratic Republic of Congo (DRC) that can support near-term accelerating demand for cobalt, says Fortune Minerals president and CEO Robin Goad.
The project comprises a proposed mine and mill in the Northwest Territories and a refinery in Saskatchewan.
Goad tells Mining Weekly that electric vehicle (EV) adoption is accelerating, as globally, governments are moving to ban the internal combustion engine or otherwise incentivise the buying and use of EVs to reduce greenhouse-gas emissions and society’s carbon footprint.
“This disruptive transformation of the automotive industry will require dependence on other commodities and supplant oil’s importance in the global economy.”
One such commodity is cobalt because of its use as a cathode material in lithium-ion batteries to provide the preferred balance between cost, performance, energy density, charge time, charge life and safety.
Goad points out that cobalt demand in rechargeable batteries now represents about 60% of a 130 000 t/y market, whereas in the mid-1990s, cobalt demand in batteries represented only about 1% of a much smaller 35 000 t/y global market.
“This rapid growth is pressuring the supply chain, and analysts forecast that cobalt supplies could fall short of demand in the early 2020s; therefore, securing battery raw materials is of paramount importance.”
The Nico project’s development is not a ‘knee-jerk’ response to recent market developments, but rather a methodical two-decade approach to deliver the project, he comments.
“Production is expected in the early 2020s – this timing is considered ideal because double-digit growth of EV mass adoption is expected during this period as the automotive industry accelerates electrification,” he highlights.
Fortune Minerals has spent more than C$130-million to advance the project from an in-house discovery to a development-stage asset. A positive feasibility study, test mining and pilot plant processing have been completed, as well as environmental assessment approvals for the mine facilities in the Northwest Territories and refinery in Saskatchewan.
The company expects to complete an updated feasibility study in the first quarter of this year to help secure the project financing for construction. The study is assessing an estimated 30% mill throughput increase of 6 000 t/d of ore at current costs, commodity prices and currency exchange rates.
The project is expected to produce about 2 000 t/y of cobalt, and the update is also examining options to sell gold and metal concentrates or process the cobalt to value- added cobalt carbonate or sulphate chemicals to defer refinery construction and capital.
“Upon release of the new technical report, we expect to advance discussions with several potential strategic partners to secure the requisite financing for construction,” says Goad.
The company has about 45 confidentiality agreements signed with potential strategic investors, including automotive manufacturers, battery companies, private equity, mining companies, banks and traders interested in securing a strategic cobalt supply.
Fortune Minerals is also continuing to prepare for construction activities. The rezoning process for the land the company owns in Saskatchewan for the proposed refinery is under way, with additional detailed engineering required to start construction.
Meanwhile, the cobalt market is expected to grow from 130 000 t/y to between 250 000 and 300 000 t/y over the next ten years and new sources of supply are required, Goad comments. With about 70% of cobalt mine supply from the DRC and 60% of refinery production in China, new sources of cobalt are required in other countries to mitigate geographic concentration of supply.
Further, because about 98% of nonartisanal mine supply is a by-product of copper and nickel mining, the supply is not as responsive to market demands as it could be as it is impacted on by the markets for the primary metals, he says.
“Consequently, new primary cobalt mines are needed to produce ethical material, with supply chain transparency and custody control of product from ores to the production of battery chemicals. Fortune Minerals’ Nico development is such a project.”
Like any commodity, the cobalt market will ultimately respond to industry’s needs, but higher prices will be required for a sustained period of time to lay the groundwork to balance the market by supporting construction finance for the few advanced projects and encouraging exploration for new sources, says Goad.
“Our Nico asset is unique, as the cobalt produced is the primary metal in the deposit and the by-products are gold and bismuth. Although Nico is a primary cobalt deposit, its reserves include about one-million ounces of gold and 12% of global bismuth reserves,” he concludes.