Product being dumped on the international market at a low price has led Idaho Cobalt Project to scale back its operations in Lemhi County, likely delaying full production until the early 2020s.
With the price at $14 a pound, down from a high of $43 a pound, parent company eCobalt Solutions has dropped to a skeleton crew at its Salmon offices and mine site in the Panther Creek drainage, said Fiona Grant Leydier, vice president of communications based in Toronto.
Cobalt suppliers in the Democratic Republic of the Congo and elsewhere ramped up production and China increased its refinery capacity, Leydier said last week. As a result, the market is meeting demand in the short term until 2021 or 2022 and keeping cobalt prices down.
The local layoffs have begun, leaving a skeleton crew in environmental compliance, storm water monitoring and operations who will finish out the winter, Leydier said. The number of employees will fluctuate, ramping up during construction season. Some workers will finish a feasibility study and secure cobalt customers. However, with prices depressed, there’s a lull in financing options, she said.
“We decided to manage the cash we have on hand to get started up quickly” after the market improves, Leydier said. Analysts expect the price to improve after 2022 and worldwide demand for cobalt to triple by 2030, said Leydier, as car manufacturers continue to electrify their vehicle fleets. Idaho Cobalt officials had hoped to finish construction this summer and be on track for full production by 2021.
Without a completed feasibility study reflecting current market conditions, company officials don’t know what price per pound must be hit to begin full production, she said.
“That depends on where the feasibility study comes out and how refined the product has to be,” she said. It can range from the bulk concentrate produced at the local mine and mill to a low-arsenic cobalt product that meets the stringent standards for import and export.
Plans for a roasting facility at the railhead in Blackfoot are on hold as well.
“This wasn’t an easy decision to make,” Leydier said. “A lot of good people are affected. We took a hard look and turned over every rock. The guys have done a tremendous job. We are doing everything we can to bring the project into production for the benefit of the community.”
Parent company eCobalt Solutions announced Feb. 20 that it is imposing cost control measures to preserve its treasury until the cobalt market improves.
The cobalt mines in Congo and refineries in China ramped up production far faster than market analysts had anticipated, Leydier said. Some of those mines are small and artisanal, with child labor and dangerous working conditions, which Amnesty International has pointed out. Idaho Cobalt Project is part of the Cobalt Institute, Leydier said, which asks members to abide by guiding principles to ensure that no human rights are violated in the supply chain. The problem is that car manufacturers don’t necessarily abide by the same principles. China is the leading market for electric vehicle sales, Leydier said.
The United States has a reliable supply of cobalt, but lacks refining capacity, said Leydier, and in the current market the Blackfoot refinery can’t be developed.
Apple is looking directly to producers to supply cobalt for its computer batteries, Leydier said. Ford recently said it would have to tap directly into suppliers for cobalt for its car batteries and Tesla has partnered with Panasonic to produce electric vehicle batteries. Most of this is just talk, and not yet reality, she said.
“The project has never been this strong, thanks to the dedication of our employees,” said Leydier. “We intend to build on this progress and continue this positive momentum. We are confident that the price for cobalt will strengthen in the coming years and, with the work we are doing now, we remain committed to bringing the (project) into production for the benefit of the community.”