The sole North American cobalt refiner, First Cobalt, has signed a flexible, long-term offtake deal for the sale of 100pc of its cobalt sulphate production by Stratton Metal Resources.
London-based Stratton Metal will have the option to sell 100pc of the refinery's cobalt sulphate production each year for five years. The annual quantity will be agreed before the start of the calendar year and will be subject to a minimum quantity. The flexible terms will also allow First Cobalt to "enter into offtake contracts with OEMs and their suppliers, reducing amounts made available to Stratton Metals".
Stratton Metals will be paid a fee relating to the cobalt sulphate sales made under this agreement, the company said.
First Cobalt has a hydrometallurgical cobalt facility, which was operated in 1996-2015 to produce cobalt, nickel and silver. The facility is North America's first producer of nickel sulphate and has recently been the recipient of a joint local and national government investment for $10mn designed to speed up operational readiness at Canada's flagship facility. Cobalt's supply growth needs to be 16 times current output by 2040 to meet demand and North America is planning to procure domestically-produced and imported material over the same period.
As the risk from Covid-19 slowly dissipates and automotive demand continues to rise, the cobalt market has seen a surge in price volatility. These price fluctuations are likely to encourage firms such as First Cobalt to employ financial participants in order to plan future cash flows. LME cobalt prices oscillated between $27,500/t and $34,500/t in 2020, whereas prices have changed by almost $21,000/t in 2021 so far to reach current highs of $52,745/t in March.
Argus assessed 99.8pc min cobalt alloy grade prices at more than a one-year high of $24.80-25.70/lb duty unpaid Rotterdam on 9 March, up from a 2020 average of $16/lb in Europe.
