Cobalt Blue Holdings Ltd (ASX:COB, OTC:CBBHF) continues to turn heads in Australia and globally as it continues down the path to production from its Broken Hill Cobalt Project (BHCP) and value-added initiatives aimed at delivering supply chain security for the key battery metal as well as enhanced sovereign capacity.
Within Australia, the BHCP, which is centred on the traditional mining stronghold of Broken Hill in Far West New South Wales, was recently granted Major Project Status from the Australian Government and then awarded A$15 million by the Government as part of the Critical Minerals Accelerator Initiative (CMAI).
Internationally, interest is also growing with the company’s global sample program stepping up to the Demonstration Plant stage which will provide larger samples while the company was invited to Washington DC to participate in the bilateral Critical Minerals delegation between the Australian Minister of Trade and the US Commerce Secretary. The company will also be visiting South Korea and Europe.
The smaller samples of quality cobalt products from the company’s Pilot Plant were well received by prospective partners in battery producing hotspots such as South Korea and COB is also confident of a strong response to the larger, bulk samples.
COB’s BHCP is the only large-scale, ex-African, greenfield primary cobalt project globally and a top-five cobalt project (ex-Africa). Production from the BHCP will lift Australia into the top three global cobalt producers.
In this Q&A with Proactive, CEO Joe Kaderavek explains the CMAI and provides a number of reasons for the growing interest in the company.
Q: What is the Critical Minerals Accelerator Initiative (CMAI)?
A: The CMAI is a new program announced in 2022, building on the first Critical Minerals Strategy, published in 2019. It will bring new sources of supply online by supporting early and mid-stage projects that contribute to robust global supply chains, build sovereign capability in Australia and create high-paying regional jobs.
The objectives of the CMAI are to help Australian critical minerals projects contribute to supply chains of strategic importance and a support and lower the risk associated with critical development activities to help progress towards offtake qualification and seeking debt financing to proceed to production.
Q: What will grant money allow you to do?
A: Most importantly, this award will help reduce some of the risk associated with project development. We will be able to fast track a number of work packages that are normally completed after the Definitive Feasibility Study (DFS) during the construction period.
More specifically, the grant gives us the ability to bring forward key activities such as power studies, land tenure, titles and approvals processes as well as workforce planning, recruitment and training as well as work on infrastructure and services.
This is a very important aspect given the equipment availability and supply chain issues the world faces in this COVID-era. By starting these work programs now, many potential bottlenecks will be eased.
Q: How do commercial partners and foreign investors view this development?
A: We are enormously proud to be recognized as a tier one, up and coming critical minerals project in Australia.
This comes off the heels of being awarded Major Project Status in March and the invitation to Washington DC to participate in the bilateral Critical Minerals delegation between the Australian Minister of Trade and the US Commerce Secretary.
Having this level of support provides confidence to potential partners and investors that the government favours the project’s development and is unlikely to face unanticipated scrutiny that could cause delays or other hassles.
Q: Can you provide a business update?
A: We are several weeks into the development of the Demonstration Plant. A concrete pad has been poured on site for the crushing and concentrate circuit and a box cut has exposed a rock face where we are establishing a 4-metre x 4-metre decline portal that will be 80 metres in length and 40 metres deep.
Equipment continues to arrive in Broken Hill as we upscale our processing plant to develop the ore we mine from the site 20 kilometres down the road. The plant will be operational during the current quarter.
Outside of Broken Hill, our executive team is travelling to Korea and the EU (including being a panel speaker at the global Cobalt Institute Conference) during May to update our commercial partners on the latest developments.
Q: How is the cobalt market travelling?
A: The cobalt price crossed US$35/pound in February for the first time in 3.5 years and remains steady just below $40/pound.
Supply chain bottlenecks in South Africa and China have constrained supply, offering price support while other commodities have softened amid broader market selloffs.
The port of Durban in South Africa was forced to suspend operations in late April after severe rainfall forced its suspension and although restarted at the end of the month, it will take time to work through the backlog and metal market participants remain wary of logistical challenges in the region.
In China, the COVID-zero policy has led to a number of port delays in the important southern and eastern facilities, further restricting access to African material.
Furthermore, cobalt end-users are increasingly concerned over the implications from the Russia/Ukraine conflict. Russia is a large producer of many metals, including cobalt (~3,000 tonnes per annum or 1.5% global market).
On the demand side, EV sales continued to grow in Q1, with all major automotive markets seeing healthy growth.
In the US, the only automakers to post sales gains were all electric, while the overall industry reported a 15% YoY decline in new vehicle sales. Some US states (eg Washington, California) have introduced legislation to cease sales of new ICEs over the next 10-15 years.
California, which commands 11% of national auto sales and thus influential, has also set a target of tripling EV sales by 2026, representing 35% of all new car purchases (v 12% current).