First Cobalt joins forces with Glencore to accelerate cobalt refinery re-start, targeting North American EV market

First Cobalt ASX FCC Glencore restart refinery
Glencore will evaluate loaning First Cobalt the funding required to recommission its Ontario refinery, which is North America’s only permitted primary cobalt refinery.

First Cobalt Corp (ASX: FCC) has moved a step closer to the $43 million restart of its flagship cobalt refinery in Canada with the signing of an agreement with Glencore AG which will see Glencore supply cobalt feedstock, technical support and financial backing to accelerate the project.

The First Cobalt refinery is a hydrometallurgical plant in northern Ontario’s cobalt camp, approximately 600km from the US border, and is the only permitted primary refinery of its type in North America.

First commissioned in 1996, the plant was shutdown in 2015 and is now the subject of the multi-million dollar revamp and expansion project, based on a 24 tonnes per day base case scenario.

First Cobalt’s agreement with Glencore will see the companies join forces on recommissioning and restart activities to produce ethically-sourced, battery-grade cobalt for the local electric vehicle market.

Feedstock and funding

Under the terms of the agreement – which remain subject to due diligence and definitive documentation – Glencore will provide feedstock for the refinery, resulting in annual production of approximately 2,000-2,500t per annum of cobalt in sulphate.

It will also evaluate making a loan to fund capital requirements for the refinery’s recommissioning and will enter into a tolling agreement with First Cobalt.

Discussions are underway with provincial government officials to identify opportunities to streamline and accelerate the permit amendment process.

Earlier this month, First Cobalt engaged Ausenco Engineering Canada Inc to complete a scoping-level study to define the production capacity of the refinery, with the exclusion of the autoclave circuit which is currently presenting a bottleneck to increasing throughput.

The company said results of the study are expected before month end and should provide a better understanding of production constraints and opportunities under various operating scenarios.

If all goes to plan, the refinery could be operational within 24 months.

Battery-grade product

First Cobalt recently completed testing of third party cobalt hydroxide as a potential source of feed, confirming that existing processes in its refinery are capable of producing a high-purity, battery-grade cobalt sulphate.

The product assayed 20.8% cobalt, surpassing the reference grade for sulphate pricing, and was classified as “high purity” (over 99.9%).

First Cobalt president Trent Mell said the testwork had indicated the refinery could eventually become a viable alternative to China-based plants.

“Producing a battery-grade cobalt sulphate is one of our most significant accomplishments as the majority of refined cobalt for the electric vehicle market is produced in Asia,” he said.

“Furthermore, the cobalt hydroxide used in these tests is currently sold at approximately 60% of the prevailing cobalt price which could offer good margin opportunities based on the findings of our [scoping] study.”

As the only cobalt sulphate producer in North America, the refinery has the potential to grab a big chunk of the American electric vehicle market.

First Cobalt has already signed confidentiality agreements with several automotive companies interested in securing its product.

“We are encouraged by the interest shown by cobalt miners and [car] companies alike and intend to move swiftly to secure long-term feed supply and offtake contracts,” Mr Mell said.

ASX de-listing

Earlier this month, First Cobalt announced it had voluntarily applied to have its ASX listing removed by end June, but would retain its listing on the Toronto’s TSX Venture Exchange.

It cited a “comparatively low average daily trading volume” on the ASX compared to the TSX-V, as well as difficulties raising additional capital from Australian shareholders as triggers for the move.

The company is based in North America and does not have cobalt interests in Australia or any material Australian business operations.

“The financial, administrative and compliance obligations and costs associated with an ASX listing, including the higher level of regulatory compliance costs associated with a dual listing, [are] not in the best interests of [our] security holders,” it said.

At mid-afternoon, shares in First Cobalt were up 20% to $0.180.

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