Cobalt charges into view

Cobalt charges into view

Tue, 13/03/2018 - 10:33
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Electric car

China is the world’s leader in electric vehicle manufacturing, driving surging demand for battery-making materials. Photo: Shutterstock

China's electric vehicles boom is turning attention to cobalt, which is emerging as another star mineral alongside lithium.

In 2016, more than 375,000 electric vehicles were manufactured in China, accounting for 43 per cent of global EV production worldwide, according to research by McKinsey & Company.

With surging demand from electric vehicle makers adding to the cobalt needs of renewable energy industries worldwide, including power generating, grid, storage and charging, spot prices of cobalt doubled in 2017.

International consulting group CRU was commissioned by global miner Glencore in December to research related metals markets, with its report showing that by 2030, global demand for cobalt is expected to increase by 314,000 tonnes.

In 2017, the US Geological Survey estimated global cobalt resources at 25 million tonnes, with the mineable reserves estimated at 7mt.

Global cobalt production was 123,000t in 2016.

In November, China Nonferrous Metals Industry Association said it expected Chinese consumption to grow by 17.4 per cent to 54,000t in 2017, according to reports by global news agency Reuters.

Because of the increasing demand, Chinese battery manufacturers have been urged to find new sources of supply, with the country traditionally sourcing its cobalt from the Democratic Republic of Congo in central Africa.

However, it is rare to see pure cobalt deposits, with most of cobalt production worldwide coming from by-products of copper and nickel.

Cobalt resources are found mainly within sedimentary sand copper deposits, common in the DRC and Zambia, laterite nickel deposits, which are prevalent in in Australia, many island countries and Cuba, as well as mafic ultramafic volcanic sulfide deposits in Australia, Canada, Russia and the United States.

Nearly half of the cobalt produced in DRC was from the Africa copper belt, which strikes from the old Katanga province in DRC across to Zambia.

Annual production was 66,000t in 2016, and 40 per cent of that tonnage was produced by Glencore, China Molybdenum and Eurasian Natural Resources.

Australia owns 15 per cent of the estimated mineable reserves and produced 5,100t in 2016, mainly from laterite nickel-cobalt deposits in Western Australia, Queensland and New South Wales.

The main deposit types held by Australian mining companies include laterite nickel-cobalt-scandium and sulfide copper-nickel-cobalt.

The first type, generally large scale but low grade, requires complex processing utilising a high-pressure acid leach system.

The second is generally small in scale but high in grade, allowing for simpler processing.

Many Australian mining companies are rushing into cobalt, such as Ardea Resources, Clean Teq Holdings, Australian Mines, Jervois Mining and Corazon Mining, which are exploration or near-production companies listed on the Australian Securities Exchange.

Except for Corazon, the past 12 months have produced strong returns for shareholders.

Australian Mines, which is expected to make a final investment decision on its Sconi cobalt-nickel-scandium project in Queensland by the middle of the year, was the leader of the bunch, with its stock rising by 1,037 per cent in the year to February 15, to trade at 9.1 cents.

Jervois Mining also recorded a strong year, with its shares rising by 1,008 per cent over the same period, from 4.6 cents to 51 cents.

Ardea Resources’ stock rose 364 per cent over the period, while the value of Clean Teq Holdings shares increased 71.6 per cent.

Corazon’s shares fell 56 per cent over the period, from 3.9 cents to 1.7 cents.

 

 

Lijun Yang

Managing director

Australian Mines Focus