Australian Mines has signed an offtake agreement with South Korean electric vehicle battery manufacturer SK Innovation for 100pc of the cobalt and nickel production at its Sconi project in Queensland.
The initial agreement will cover seven years with the option of a six-year extension. Sconi will supply up to 12,000 t/yr of cobalt sulphate and 60,000 t/yr to SK Innovation. The battery manufacturer will contribute to the development of the project's bankable feasibility study and processing plant optimisation, Australian Mines said.
The agreement requires full financing for the construction of commercial infrastructure no later than 31 December 2018 and that mining commence at the site no later than 31 December 2020.
In the first year, up to 1,000t of cobalt sulphate and 5,000t of nickel sulphate will be supplied to SK Innovation. In the second year, this will rise to 8,000t of cobalt sulphate and 40,000t of nickel sulphate. The full volumes will be delivered in the third year.
Pricing will be adjusted depending on the percentage of nickel or cobalt in the sulphate and will be linked to London-based metals exchange LME cobalt and nickel metal prices, Australian Mines said.
SK Innovation is expected to deliver the cobalt and nickel sulphates to battery plants in Hungary and South Korea, with finished batteries delivered to premium German car manufacturers.
This news comes as cobalt producers such as Glencore and Eurasian Resource Group focus on increasing cobalt intermediate and chemical production as demand from the electric vehicle battery sector increases.
Australian Mines is aiming to complete its Sconi bankable feasibility study by the end of March.
