First Cobalt (TSXV: FCC; US-OTC: FTSSF) has taken a major step toward becoming the only producer of refined cobalt in North America.
The company, which plans to restart its hydrometallurgical cobalt refinery near Cobalt, Ont., has signed an agreement with Glencore (LON: GLEN) that will see the metals giant supply the junior’s refinery with cobalt feedstock.
Under a memorandum of understanding, Glencore will also provide a loan to cover the estimated cost of re-commissioning the refinery, and collaborate on its final flow-sheet design.
“There are so few refinery options outside of China that all roads pretty much lead there, so it puts us in a unique situation, where it allows us to provide cobalt to North America, where we don’t have any,” says Trent Mell, First Cobalt’s president and CEO.
The arrangement appeals to Glencore because it sells its cobalt hydroxide material to China and doesn’t get the final product back, Mell explains, adding that the two companies are also working on the terms of an offtake agreement.
A second attribute that makes the deal attractive to Glencore, Mell says, is that having a refinery in North America allows it access to U.S.-based battery and automobile manufacturers. First Cobalt’s refinery is about 600 km from Canada’s border with the United States.
“The objective is to get ourselves to a battery grade product — cobalt sulphate — and right now U.S.-based battery makers and automobile manufacturers need to bring it all in from elsewhere, so the idea of being the sole provider of cobalt sulphate on the North American continent puts us and Glencore into a unique situation where we can develop the electric vehicle market,” he explains.
The refinery could be operational in as little as 18 to 24 months, and discussions are underway with provincial government officials to identify opportunities to streamline and accelerate the permit amendment process. First Cobalt only needs a permit to take water, and it should only take between three and six months to get it, Mell estimates.
“That’s the beauty of a brownfield site, and all the work we’re doing is within the four walls of the building. There are no earthworks, no tailings … We’re replacing leach tanks and motors and instruments, not pouring concrete and building roads.”
In April, testing of third-party cobalt hydroxide as a potential source of feed confirmed that the existing processes at First Cobalt’s refinery are capable of producing a high-purity, battery-grade cobalt sulphate.
The positive test results at SGS’s lab in Lakefield replicated the refinery’s circuits and flowsheet, and the product – refined in a single batch – assayed 20.8% cobalt, surpassing the reference grade for sulphate pricing, and paving the way for the company to bring the refinery out of care and maintenance.
The results were followed in May by a scoping study completed by Ausenco Engineering Canada, which envisions annual production at the refinery to reach over 5,000 tonnes per year of cobalt, more than twice the previous estimate, and that the elimination of its autoclave circuit would keep costs down.