Cobalt: How does First Cobalt’s refinery measure up against its Chinese peers?

Early-May saw the release of First Cobalt’s (FCC) feasibility study (FS) regarding the redevelopment and expansion of its cobalt refinery complex in Ontario, Canada. This study set out the construction of a facility with the capacity to produce 25ktpy of cobalt sulphate (5ktpy contained cobalt) from third-party hydroxide feedstock.

Roskill View

Cobalt sulphate production is dominated by China, which currently accounts for around 80% of global capacity. As with all components of the battery raw material supply chain, any geographic broadening of supply is strongly welcomed by many non-Chinese industry consumers; so, what is the prognosis for the development of the Ontario facility?

Comparing some of the FS findings with analysis from Roskill’s Cobalt Chemicals Cost Model Service, which gives granular analysis into the cost of producing cobalt chemicals and fine powder, we see some interesting points.

The FS outlines a planned cobalt recovery of 93%. However, our analysis suggests existing plants (predominantly in China) with comparable flowsheets, often achieve recoveries of around 95%. This suggests there is potential for improvement on this 93% figure, as indicated by FCC’s comments. 

The processing costs of US$2.72/lb cobalt contained (excluding feedstock costs) is broadly comparable to costs currently being achieved in China. However, within the granularity outlined by FCC, there is some notable divergence:

  • Labour costs for FCC’s plant are markedly lower than those currently being achieved at many operations in China. In part, this reflects the lower production and utilisation rates of Chinese operations currently, which should improve as these plants achieve higher utilisation rates as the market grows. However, this does not account for the whole difference and, given the contrast in salary rates between the two countries, likely reflects a significant amount of planned automation at FCC’s plant.
  • Reagent costs are higher than those in China, which is understandable given China’s advantageous position of having a large and diversified local chemical supply chain.

  • Favourable energy prices in Canada have helped deliver some cost savings here, although these account for under 5% of FCC’s processing cost.
  • The main cost difference relates to FCC’s sodium management cost, which accounts for around 30% of the plant’s planned processing costs. Within the proposed flowsheets, sodium is accrued from the use of sodium hydroxide and its waste product, sodium sulphate, can be an environmentally tricky compound to dispose of in locations without a local market to consume it.

The capital cost of FCC’s plant expansion is US$56M, which equates to around US$5/lb of annual production capacity. Based on our estimates, this capital intensity is considerably higher than for cobalt sulphate plants currently being developed in China. Across the metals space, the capital intensity cost of new processing facilities in China are some of the lowest globally, owing to the availability of cheap labour and low-cost items of plant and equipment.

Finally, the overall profitability of a cobalt sulphate plant is often dictated by the cost of obtaining feedstock material. As such, much will depend on the deal FCC manages to strike with Glencore (or potentially, other parties) in terms of financing, feedstock supply and subsequent offtake.

Roskill’s Cobalt Chemicals Cost Model Service is designed to provide miners, financial institutions, governments and other industry stakeholders with an in-depth understanding of the the costs involved throughout the cobalt supply chain. For more information, click here.

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This article was written by Oliver Heathman. Please get in touch below if you wish to discuss further:

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