How Chilean Cobalt Corporation is looking to capitalize on the growing EV market

Chilean Cobalt Corporation, a US based company, is developing a cobalt project involving copper as a by-product in the San Juan district of the Atacama region.

The market for electric vehicle batteries, the largest source of global demand for the hard, silvery metal, is expected to continue growing as cobalt-containing battery chemistries form a dominant part of lithium-ion battery manufacturing around the world. 

However, cobalt production remains relatively limited, estimated at under 150,000t in 2021, with total global reserves thought to be 7.1Mt according to the United States Geological Survey (USGS), and 75% of current output coming from the Democratic Republic of Congo, meaning that Chile's reserves could offer a valuable opportunity in the Americas. 

To find out more about this project in the north of the country, as well as cobalt mining and the market prospects for the metal, BNamericas talks with the CEO of Chilean Cobalt Corporation, Duncan Blount.

BNamericas: Why is the company interested in the La Cobaltera project?

Blount: It is located in a Chilean district that is known as a primary cobalt district in the world. The other districts that we know are in Morocco, the Bou Azzer cobalt mine and the Idaho cobalt operations in the US, in addition to some deep-sea mining projects that are being developed.

We have around 2,600ha where we own 100% of the mineral rights. We completed an exploration campaign with our technical adviser, SKR Consulting, and drilled over 20,000m of cores on about 100 holes. We confirmed the historical exploration and mining data that was available on La Cobaltera, as the area was developed at various stages to mine cobalt and copper for nearly 200 years. The historical works, including underground and open pit mines and even an old World War II-era flotation plant are on the site. 

BNamericas: What has happened at La Cobaltera in recent years?

Blount: During the pandemic the project was put on hold. I joined the company as CEO in the last [northern hemisphere] summer and my main focus has been restarting exploration and re-engaging with investors, including potential strategic partners.

I went to La Cobaltera several times last year with the geologists and the engineering team to reassess the project and it was exciting to look at what the company has done previously. It highlights the opportunity we have in terms of developing a sustainable source of cobalt in the Americas.

This is quite rare, since 75% of the world's cobalt comes from the Democratic Republic of the Congo [DRC], with Indonesia as the second largest producer, while 60% of all cobalt mined in the world is processed in China. 

For a lot of automakers, particularly those in Europe and the US, there is increasing pressure to not source material from the DRC, Indonesia or China. That has frankly gone further with the Inflation Reduction Act that was passed in the US last year, since it prioritizes material from US Free Trade Agreement countries such as Chile. This is an opportunity for us. 

BNamericas: What other advantages does this project have?

Blount: Chile has a wealth of resources in terms of infrastructure, a strong mining tradition and a stable legal jurisdiction for international mining companies. We operate at a low altitude, 700m to 1,000m, and La Cobaltera is about 10km from the coast, so we have the option of using seawater or desalinated water for our operations. We also don't have any local communities onsite, so relocation won’t be an issue. There are towns nearby, including Freirina, Huasco and Vallenar, allowing us to have skilled labor and lodging available at a reasonable distance.

BNamericas: What connection do you have with local firm Baltum Mining?

Blount: We own 100% of Baltum, which is our Chilean entity that holds the licenses. Through them, we are carrying out the exploration with SRK and our geologists.

BNamericas: What does the next phase involve? 

Blount: We’re looking at the unexplored greenfield areas that we hold. We will be progressing an advanced mapping program, planning to use drones to survey these areas, including ground-penetrating radar, Lidar, infrared, geophysics, and other topographical surveying so that we can better identify the next drilling targets, which would start toward the end of the year. Then, we will decide which areas we will take up for development and production.

BNamericas: Will you also advance a pre-feasibility study?

Blount: Before we do a pre-feasibility study, we're studying the best targets that we intend to develop. After this exploration campaign, called phase 1, we’ll do additional geological mapping, sampling, trenching, and geochemical and geophysical analysis. 

Following that, phase 2 may happen toward the fourth quarter of this year or early next year. We’ll do one or more drilling campaigns based on new targets identified. After that, we will see which projects to develop to progress to the pre-feasibility stage, which could be one year from now and maybe in the second or third quarter of 2024. The fact that we have good accessibility to infrastructure, roads, power and water means we can fast-track development. 

BNamericas: What are the differences between copper and cobalt mining?

Blount: Cobalt is closer to nickel and iron on the periodic table than it is to copper, so the chemistry and metallurgy are different and the grade is also typically lower. The highest grades of cobalt in the world are 0.5% to 1.0%, while high-grade copper is 3% to 5% or higher.

In this case, we're looking for a mineral that is much scarcer than copper and the market is a lot smaller. The price is also sometimes 10 times higher for cobalt versus copper. At La Cobaltera, we have high grades of both cobalt and copper. 

When it comes to technologies, we use drone and rover equipment to do the advanced mapping programs, which can be used for cobalt and copper, but also for nickel or rare earths, so who knows what else we might find. 

We've also done some sample testing using bioleaching, which is simply using organic bacteria that can be applied to crushed rock to help release and facilitate recovery of cobalt and copper and whatever else can be in the ore. We’re working with a US company in Texas, but there are also Chilean companies like [state miner] Codelco that use bioleaching and, since copper will be a by-product for us, we plan to work with them to process and produce, while reducing the use of chemicals.

BNamericas: Is cobalt used mostly as a chemical?

Blount: We still use cobalt as an alloy for jet engine turbine blades, magnets, specialty construction materials and in other high-performance applications, but the growth is really on the battery side. Batteries require cobalt chemicals, mostly cobalt sulfide and cobalt hydroxide, which are used as feedstock and intermediaries to produce the cathode of a lithium-ion battery. 

We anticipate supplying the markets for lithium-ion batteries for electric vehicles and grid-level energy storage solutions, and part of that means converting cobalt metal into cobalt chemical. China does 60% of cobalt processing, so there is an opportunity to develop some additional processing capacity to use material from Chile that can perhaps supply a battery gigafactory in the US, or in other places in the Americas, building NMC [nickel-manganese-cobalt] cathodes. 

BNamericas: What are your projections for the cobalt market? 

Blount: Cobalt is a much smaller market than copper and lithium but growing at a pretty rapid pace. There’s a lot of focus on eliminating cobalt from the cathode of batteries. Over 70% of the average load of cobalt in batteries has already been engineered out, but it hasn't been engineered out completely, particularly for more energy-dense and high-power applications. 

Not every internal combustion engine car needs four-cylinder engines, some need a V8 and those are similar to electrical vehicle [EV] applications that require cobalt in the chemistry. With these same applications for EVs, automakers will typically use NMC or NCA [nickel-cobalt-aluminum] cathodes. 

Now, some EVs like the EV Hummer by General Motors use Ultium batteries, which have a cathode of NMC 9.5.5, so the average load of cobalt is coming down, but the growth of these markets more than makes up for what we are facing with the reduction in per-unit demand. Cobalt’s advantages for cathode chemistry cannot be denied. Cobalt is also used in the superalloy markets, which aren't growing at the pace of the battery market, but still make up about half of demand.

BNamericas: What are the cobalt price forecasts?

Blount: When we started this project, the cobalt price was between US$80,000/t and US$100,000/t. Then, because of COVID-19 and other market issues, spot market prices fell quite significantly to around US$32,500/t. 

A lot of that is because the global cobalt market is small and very concentrated in terms of mines and geography. I think prices are going to move higher because a lot of the current projects are very low-grade. So, in the long term, we expect cobalt prices to be in a range of US$55,000/t or higher, as many analysts are forecasting a supply deficit around 2027 and 2028.

BNamericas: Have you received interest from buyers or investors to participate in La Cobaltera?

Blount: A lot of the automakers and battery companies want to develop direct partnerships with miners as suppliers and others want to source the materials themselves, and some are even taking battery manufacturing in-house. We’re seeing how Tesla is moving toward in-house battery manufacturing and they're looking to source much of their own materials, whether it's nickel, graphite, lithium, copper or cobalt.  

But there's also interest in pre-production projects that will start 3-10 years from now. This bodes well for further partnerships between mining companies and end users. We’ve been in touch with a lot of these US and European automakers, and with a lot of Japanese, South Korean, European and US battery manufacturers. We're also open to institutional investors.

It has been an exciting time to be raising capital and looking at strategic partnerships for a project like this.