Chilean Cobalt signs LOI for offtake deal with Glencore

US-based Chilean Cobalt Corp (C3) signed a non-binding letter of intent with Swiss multinational Glencore for the sale of the cobalt and copper that the former plans to extract from its La Cobaltera project in northern Chile.

Under the offtake agreement, C3 is expected to supply Glencore with 100% of the company's production of cobalt and copper for an initial period of five years, according to a statement. 

“C3 and Glencore anticipate that the majority or full spectrum of copper and cobalt intermediate product stream will be shipped into the United States and/or US Free Trade Agreement countries,” the junior company said. “The sales price will be based on an agreed upon pricing formula linked to future prevailing market prices.”  

The initiative is part of C3's search for financing to continue developing La Cobaltera in Atacama region, which is currently in the advanced exploration stage. Capex is put at US$250mn for estimated cobalt production of 3,000-5,000t/y and 20,000-25,000t/y of copper.

“Glencore is expected to provide strategic support for the advancement of C3's La Cobaltera Phase 1 cobalt-copper project and collaboration on greenfield solutions for domestic US processing and refining into battery materials and/or metal products,” the release states.

“Through this offtake agreement, C3 is expected to be able to leverage Glencore's own capabilities and global network as one of the world's leading industrial producers and marketers of cobalt with extraction and processing in the Democratic Republic of the Congo, Australia, Canada, and Norway - and with a growing cobalt recycling presence in the US.” 

The contract, which is subject to the typical conditions of such a transaction, comes after C3 announced in June a non-binding agreement to receive a loan of up to US$317mn for 15 years from the US EXIM Bank to finance the construction of La Cobaltera and its feasibility study, as well as the possible acquisition of new mining concessions in Chile.

C3 is optimistic about its Chilean project as cobalt is a critical mineral for the manufacture of lithium batteries for electromobility and clean energy.

According to C3, there will be a widening deficit in cobalt from 2030, and “there is an insufficient pipeline of exploration and development projects to fill this gap," the company said in a corporate presentation, which can be seen in the Documents box in the top-right corner of the screen.

Among the advantages of La Cobaltera are a mineralized area of 2,635ha, fully owned by C3, its low altitude (700m-1,100m), proximity to the port of Huasco and the distance from the coast (10km). Planning considers the use of seawater in operations.

In addition, the project is close to the regional electrical grid, offers the potential to be supplied by solar energy and is located in Chile, one of the countries with which the US has an FTA, so there is the possibility of accessing the benefits of the Inflation Reduction Act that grants tax credits and incentives to entities that promote domestic production of clean energy and electric vehicles.