Global mining and trading group Glencore's decision to sell a third of its cobalt output over the next three years to Chinese battery and recycling firm GEM is seen as a boon for Australia's cobalt producers.
Glencore is to sell 52,800t of cobalt to GEM – 13,800t in 2018, 18,000t in 2019 and 21,0005 in 2020. It produces cobalt as a by-product from its copper and nickel mines in the Democratic Republic of Congo, Australia and Canada.
"This deal will tie up a lot of the world's cobalt supply, which is currently around 100,000 t/yr," Sean Gregory, chief executive of Perth-based cobalt-nickel developer Barra Resources said at a battery minerals conference.
Cobalt is a key ingredient in the production of lithium-ion batteries for electric vehicles and energy storage.
More than 56pc of the world's cobalt is mined in the DRC, which has recently increased its mining royalties. It also has a question mark over the ethics of its supply chain. Cobalt is likely to emerge as an even more strategic metal as battery manufacturers and automakers seek to secure supply, he said.
Barra Resources is developing the Mt Thirsty in Western Australia. It aims to produce 6,000 t/yr of mixed nickel and cobalt sulphide, which will include 2,000 t/yr of cobalt sulphide over a period of 21 years.
A pre-feasibility study is expected to be completed by the end of this year. The company is in discussions with Japanese trading houses on potential financing and offtake agreements. The project's mineral resource is 31.9mn t, grading 0/13pc cobalt and 0.55pc nickel.
"With supply limited and demand growing from the electric vehicle battery market and other industrial application, cobalt prices are likely to continue rising as access to supply tightens," Gregory said.
"Lithium is abundant in South America, Western Australia and other places, cobalt is not." Around 97pc of global cobalt output is a by-product of copper or nickel production, he said.
Traditionally investors like to invest in or close to their own time zone. But with a growing shortage in the cobalt market, Australia could attract a lot of foreign investment in its cobalt projects, he said.
Several other companies are developing cobalt projects in Australia, including Ardea Resources, Cobalt Blue, Australian Mines, Platina Resources, Metals X and CleanTeq Holdings.
Diversified resources group Independence Group produces cobalt as a by-product of its nickel output in Western Australia. Brisbane-based Highlands Pacific is a shareholder in the Ramu nickel-cobalt mine in Papua New Guinea which produces around 6pc of the world's cobalt outside of the DRC.
