The company is contemplating an initial recommissioning of the refinery in partnership with commodities miner and marketer Glencore before expanding production as early as the second half of 2021, it said.
“Market volatility and economic uncertainty due to Covid-19 have put downward pressure on commodities and cast uncertainty over short-term global economic activity. First Cobalt has implemented modified work practices, but work continues on our strategic plan with minimal impact on our schedule,” company chief executive officer Trent Mell said.
“The electric vehicle (EV) revolution is a generational megatrend that will continue to change the way we move around, regardless of short-term market fluctuations. Cobalt remains essential to an electric future and our partnership with Glencore will be a competitive advantage as we move towards first production,” he added.
Glencore provided a $5 million loan facility to Canada-headquartered First Cobalt in August to complete work associated with a refinery restart and expansion.
The goal is to produce battery-grade cobalt sulfate for pre-qualification for the electric vehicle supply chain. Offtake discussions are under way, Mell said, with several automotive companies interested in a North American supply of battery grade cobalt.
Refinery studies are now nearing completion, including a pre-feasibility study for its restart and a definitive feasibility study for an expansion scenario.
A scoping study released in May 2019 concluded that the refinery, which has been on care and maintenance since 2015, is capable of producing more than 25,000 tonnes per year of battery-grade cobalt sulfate for the electric vehicle industry, equivalent to roughly 5,000 tpy of contained cobalt.
In light of recent market developments, Mell said the company is closely monitoring conditions and their potential impact on the economy.
“First Cobalt has a strong balance sheet and sufficient capital for at least the next 12 months. We will also have funds remaining from Glencore loan proceeds to continue with advanced engineering and permitting activities after completion of the feasibility studies,” he noted.
“In the interim, management expects to conclude a debt arrangement to fund a restart of the refinery, which would be repaid with cash flow from the production of cobalt sulfate,” he added.
Cobalt prices had increased following the coronavirus outbreak but are now declining amid slow trade and limited inquiries, with sellers cutting offers and increasingly expecting to pay below $17 per lb for standard-grade material.
Fastmarkets assessed the price of cobalt sulfate 20.5% Co basis, exw China at 50,000-52,000 yuan ($7,283-7,575) per tonne on Friday March 13, down 1.9% from its prior assessment amid persistent weak demand. Traders expect prices to fall below 50,000 yuan per tonne soon, they said.
First Cobalt was created via the merger of four cobalt companies to create a vertically integrated cobalt company with assets in the US state of Idaho and the Canadian province of Ontario.
There are primary cobalt refineries in Canada at Fort Saskatchewan (Corefco and Umicore), Port Colbourne (Vale) and Voisey's Bay (Vale).
The feasibility study for an expansion of the currently idled First Cobalt cobalt refinery in Canada continues despite the novel coronavirus (2019-nCoV) outbreak, with a restart in the fourth quarter under consideration.