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CobaltBlue (ASX:COB) has taken another step closer towards a world wherein Australia’s first cobalt refinery is set up in Kwinana, Western Australia.
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While the company hasn’t yet kicked off any definite ball rolling downhill, COB has struck a binding pre-Final Investment Decision (FID) ‘consortium deed’ with the Australian arm of privately held Japanese-founded Iwatani.
That deed, despite being binding, doesn’t particularly mean much yet.
It outlines the steps COB and Iwatani will take in arriving upon FID, but that’s just a roadmap to get to a decision not yet locked in.
The proposed Kwinana Cobalt Refinery (KCR), which would be Australia’s first (in the universe where it is built), would obviously be a large asset in Australia’s sovereign critical minerals capacity.
It would also be Australia’s first cobalt refinery.
Nameplate capacity on paper puts the plant at 3,000tpa of output of cobalt sulphate “or metal,” and the company pointed to ‘robust ESG policies,’ given the unfortunate reputation cobalt has of being dirty. That’s because mining and refining it is, in fact, dirty.
But cobalt the metal can’t help that – and if countries want to destabilise China’s stranglehold on the critical minerals industry, they’re going to have to make concessions when it comes to waste streams.
(This is something I covered briefly in a recent HotCopper Market Watch podcast.)
But that’s all beside the point.
Perhaps worth noting is COB is seeking to produce battery-grade cobalt for electric batteries which, as of late, has been a thematic ebbing in turn with low lithium prices. Assuming they’re eyeing EVs, the rise of BYD could also be an issue.
As EV prices get cheaper and cheaper, part of that has to do with cheaper supply chains – which implies less margin strength compared to what you’d have gotten in the early 2020s. Just food for thought.
At any rate, for the parties to hit the point where FID may or may not be a greenlight, COB is required to provide quality-check-passing samples to customers using the same processes that would be used in Kwinana from a facility in Broken Hill; the company will need to ink JV, offtake and IP agreements; and due diligence reviews and technical studies would need to be inked.
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So, who knows? By the time the project is ready to actually reach FID, perhaps battery metal market dynamics may have changed. Last year, BMI was forecasting a lithium recovery in 2028, which would likely help bring up the prices of other battery metals.
Nickel, however, may remain under the pressure of Indonesian supply for years to come.
COB last traded at 5cps.
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