Jervois Global ‘moderates’ Sao Miguel Paulista refinery restart; moves to re-align project portfolio

Australia-based cobalt and nickel supplier Jervois Global has opted to 'moderate' the pace of restart operations at its Sao Miguel Paulista (SMP) cobalt and nickel refinery in Sao Paulo, Brazil

Jervois Global has decided to consider purchase offers for its Nico Young nickel and cobalt project located in New South Wales, Australia, as part of an ongoing portfolio review. The project comprises three exploration licenses over a 40 square kilometers area.

Production of nickel and cobalt metal at the SMP refinery was expected to begin in the first quarter of 2024, following a feed agreement with Traxys Europe signed in February 2023. The refinery was purchased in 2020, having been previously owned by Votorantim SA, which produced ‘Tocantins’ nickel and cobalt metal cathodes at the site.

Production is now estimated to start ’12 months from full mobilization’, with a date of mobilization currently not published by the company. But in a quarterly earnings call on July 26, James May, chief financial officer of Jervois Global, said: “The full reactivation of the [SMP] restart project is to be expected once we have a confirmed funding pathway.”

The company recorded a net loss of $93.95 million in the first half of 2023, compared with a net income of $2.85 million in the same period of last year, according to the report.

Traxys intends to provide 25% of the mixed hydroxide precipitate feed requirement to enable the refinery to produce 10,000 metric tonnes of nickel and 2,000 metric tonnes of cobalt metal cathode per year. Further agreements with feed suppliers and financing stakeholders are reportedly being sourced.

The cost guidance of the SMP project is unchanged considering the restart decision, estimated at $65 million.

The final investment decision (FID) for the SMP project was announced in November 2022, but, according to a recent company presentation dated August 7, a revised FID is now a focus for the company after the deferral of a final acquisition tranche.

Jervois’ suspended operations earlier this year at their Idaho Cobalt Operations (ICO) project in the United States due to ‘cyclical weakness’ in the cobalt market and inflationary pressures on construction costs.

Bryce Crocker, chief executive officer of Jervois Global, has previously stated that the restart of ICO would look to only be considered if the cobalt metal price heads above $25 per lb.

Fastmarkets’ daily price assessment for cobalt standard grade, in-whs Rotterdam was $15.50-17.00 per lb on Friday, unchanged from the day previous. However, this is down from $23.50-24.50 per lb on August 18, 2022.

Despite weakness in the cobalt market, the company views the current nickel price, the nickel metal premium and MHP payables to be favorable for the restart of the refinery.

“My view is that the [SMP] asset is important, not only [it] will obviously be generating significant cash flow in the current market, both with nickel prices, input costs and nickel metal premier,” said Bryce Crocker, chief executive officer of Jervois Global in a quarterly earnings call on July 26.

Fastmarkets assessed the nickel mixed hydroxide precipitate payable indicator, % London Metal Exchange, cif China, Japan and South Korea at 71-74% on Friday, down from 71.50-74.00% on August 11.

In June, Jervois received separate funding from the US Department of Defense and the Finnish Government aimed at advancing critical mineral supply-chain security in the respective countries.

In the financial report published on August 18, Jervois told its stakeholders that it continues to engage with the US Department of Energy on further financing initiatives.

“US Government support in developing a viable domestic cobalt supply chain is important given the energy transition and Jervois’ expectation that Western cobalt purchasers will increasingly prefer cobalt from sources with Western ESG credentials, such as ICO,” Jervois said.

The company also views a recovery for electric vehicle (EV) battery demand coming later this year with ‘significant upside into 2024’, owing to growing EV adoption rates and the incentives from the US Inflation Reduction Act (IRA).

Jervois Global has said previously that it will align itself with IRA, which was designed to enhance the security of US critical mineral supply chains, and that the $15 million funding grant the company received will also enable a feasibility study into building a cobalt refinery in the US.

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