<article><p class="lead">After retreating from the spotlight over the past two years, Australia's battery metal cobalt sector is making a comeback as producers and explorers seek to benefit from a fresh upsurge in demand and stronger prices.</p><p>Interest in the metal waned as prices tumbled from record highs in 2018, leading to a prolonged period of underinvestment in the supply chain. But there are signs that a sustainable demand-led recovery is under way, and prices have been gradually strengthening amid expectations that the cobalt market is transitioning to deficit from surplus territory.</p><p><i>Argus</i> assessed prices for 99.8pc grade cobalt metal at 275-300 yuan/kg ($42.55-46.42) ex-works today — still down from Yn650-700/kg in March-April 2018 but up from a low of Yn215-225/kg in July 2019. In Europe, prices for min 99.8pc chemical grade cobalt ended last week at $16.50-17.30/lb du Rotterdam, down from $43.80-44.20/lb in late-April 2018 but up from a low of $12-12.60/lb in August 2019.</p><p>Australian cobalt production of around 5,100t/yr — the third-highest in the world after the Democratic Republic of the Congo (DRC) and Russia — is dominated by Glencore's Murrin Murrin nickel-cobalt mine in Western Australia, which accounts for around two-thirds of the country's annual output. The mine produced 3,400t of by-product cobalt in 2019 and 1,600t in the first half of 2020.</p><p>Another significant producer is nickel miner IGO through its Nova mine, also in Western Australia. It produced 1,142t of by-product cobalt in its July 2019-June 2020 fiscal year, but output is expected to be under 1,000t in 2020-21.</p><p>Other cobalt output in the country is low-scale, but several greenfield and brownfield projects are in varying stages of progress, contributing to increasing production possibilities. </p><p>Underlining this improved outlook, ratings agency Fitch expects Australia's cobalt sector to grow by 5.3pc/yr, on average, from 2021-29, as compared with 2.4pc/yr from 2010-2020. </p><p>While the global market for cobalt sulphate, cobalt metal and cobalt hydroxide has been relatively stable since Glencore suspended production at its Mutanda mine in the DRC for two years from November 2019, it is the tightening supply of cobalt hydroxide that is getting Australian cobalt miners excited. </p><p>Of these, only Cobalt Blue has its primary production focus on cobalt at its Thackaringa deposit in New South Wales, anticipated to ramp-up to output of 3,500 t/yr once fully operational. A pilot plant is scheduled to be operational before the end of March, aimed at supplying samples to up to 15 international "interested parties, including LG International, Mitsubishi and Sojitz Corporation. </p><p>Australian Mines lost an offtake partnership arrangement with South Korea's SK Innovation, but is on the lookout for a replacement to assist it in developing its Sconi nickel-cobalt project in Queensland. Its aim is to produce around 209,000t of cobalt sulphate over at least 30 years. </p><p>Also in the development frame is CleanTeq, owner of the fully permitted Sunrise nickel-cobalt-scandium project in New South Wales. It is also seeking a suitable offtake partner to advance its production plans and is in talks with battery manufacturers and automakers. </p><p>Closer to adding to Australia's cobalt output is Panoramic Resources through its Savannah nickel-copper-cobalt mine in Western Australia, which was suspended in 2016 due to weak nickel prices but is being restarted in a more positive commodity price environment. It is likely to add around 800 t/yr to Australia's cobalt output over a period of at least eight years. </p><p>Although Australian companies appear to have reduced their interest in proving up commercially viable cobalt resources in Africa, they have intensified their enthusiasm for deposits in North America.</p><p>New World Resources — which renamed itself from New World Cobalt after the market collapsed in 2018 — is once again eyeing cobalt after diversifying into other metals such as copper, gold and zinc. It owns the Colson and Elkhorn cobalt projects located on a 60km-long belt. </p><p>Fellow Australian explorer Jervois Mining also has projects in the Idaho cobalt belt following its merger with eCobalt Solutions and M2 Cobalt, while Tyranna Resources is in the early stages of developing the Goodsprings cobalt and base metals project around 50km southwest of Las Vegas in the US state of Nevada.</p><p class="bylines">By Angus MacMillan</p></article>
