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Cobalt Blue and Broken Hill project at forefront of Australia’s cobalt future

Published: 18:07 15 Feb 2021 EST

Cobalt Blue Holdings Ltd - Cobalt Blue and Broken Hill project at forefront of Australia’s cobalt future
A pilot plant to produce pyrite concentrate for downstream processing is on track to be completed within weeks.

Most energy metals investors are aware that the Democratic Republic of the Congo (DRC) is the main source of mined cobalt and that Chinese companies control more than 80% of the cobalt refining industry to provide commercial-grade cobalt metal and powder to supply the burgeoning lithium-ion battery market.

Lithium-ion batteries have driven a spectacular roller coaster in the cobalt market in recent years and while analysts warn that cobalt content in the new batteries will slowly reduce, this is unlikely to dampen industry appetite for the metal as energy storage and electric vehicle production expand.

Almost all cobalt is produced as a by-product from base metal mines. These generally have comparatively low cobalt content and many have considerable community, environment and cost issues.

Australia has the potential to increase cobalt production to supply growing market demand and reduce the monopoly of supply by identifying and developing pyrite-cobalt (sulphide) deposits which can be built without the high-costs and ecological concerns faced by many current cobalt producers.

Australian company Cobalt Blue Holdings Ltd (ASX:COB) (OTCMKTS:CBBHF) is developing the Broken Hill Cobalt Project (BHCP) which serves as a model to address these challenges. The project is at the forefront of a new era of cobalt production in Australia.

The company’s consulting geologist Dr Ian Pringle explains why the BHCP will be a game-changer for Australia and for the cobalt industry.

Cobalt in sulphide deposits

Commercial cobalt deposits belong to two types of ore - sulphides (magmatic and sediment hosted) and sulphide-free laterite deposits.

Sediment-hosted sulphide deposits in central Africa dominate cobalt production, and the DRC produced more than 70% of global cobalt supply in 2020. Sulphide ores contain cobalt together with other base metals such as copper and/or nickel and metals are extracted using conventional practices.

The rest of the world has relatively low-grade sulphide deposits with cobalt as an accessory metal to nickel and/or copper, seldom with contents more than 0.1% cobalt in magmatic sulphide deposits like Kambalda (WA), Norilsk (Russia) and Sudbury (Canada).

Magmatic sulphide deposits account for 23% of cobalt production but cobalt recovery from most is low, commonly between 20% and 66%.

Cobalt in laterite deposits

Nickel-rich laterite deposits supply 15% of cobalt demand and laterite ores are becoming a growing source of cobalt outside the DRC. Nickel and cobalt in sulphide-free laterite ores must be separated through complex, large-scale, bulk mining and hydrometallurgical processing often requiring the removal of considerable volumes of water.

Laterite cobalt is produced from substantial, near-surface nickel deposits which range to more than 400 million tonnes. Laterite mines have average nickel grades between 0.66% and 2.4% (median 1.3% nickel) and cobalt contents between 0.01 and 0.15% (median 0.08% cobalt).

Most laterite nickel-cobalt mines are within 26 degrees of the equator in the Philippines, Indonesia, PNG, New Caledonia, and Brazil. These near-surface deposits form from supergene weathering of underlying ultramafic parent rocks in geologically short time frames of generally less than a million years. Without including cobalt in deep-sea nodules and submarine rock surfaces, the US Geological Survey calculated that 36% of global cobalt reserves occur in laterite deposits.

Australia has large cobalt-bearing nickel laterite deposits including Glencore’s Murrin Murrin Mine in the north-eastern Goldfields of WA and CleanTeQ’s undeveloped Syerston Project in central NSW. In 2019, Murrin Murrin was the country’s largest single cobalt producer with 3,400 tonnes per year of cobalt and it accounted for the majority of Australian cobalt output.

The Broken Hill Cobalt Project

Cobalt Blue’s BHCP is 23 kilometres west of Broken Hill in Far West NSW. The resource is not a laterite but rather a sulphide (pyrite) cobalt deposit with no copper, negligible nickel and very distinctive mineralogy which enable a mine design with substantially lower outlay and high cobalt recoveries (85-90%).

The company intends to produce 3,500 to 4,000 tonnes per year of cobalt using a very different metallurgical process than laterite treatment and this is expected to be a healthy investment for stakeholders and the environment.

BHCP’s process is divided into concentration, calcining, leaching and product recovery. Processing will be supported by the nearby 53MW Broken Hill Solar Farm and reticulated town water supply. An ecologically sensitive integrated waste landform has been planned for co-disposal of mine waste rock and process plant tailings.

Using COB’s innovative processing, the BHCP will have a marketable, sulphur value-add by-product of 300,000 tonnes per annum which can be pelletised to provide innocuous handling of dry sulphur prills without fear of acid spillage.

Concerns of laterite mine waste

Production from laterite-hosted cobalt carries a suite of environmental concerns. Tailings from laterites may include high levels of magnesium, sulphate and manganese and mine waste has the potential to be physically unstable. The sheer scale of laterite deposits requires that cobalt extraction consumes considerable water and produces substantial waste slurry.

Laterite production also requires whole-of-ore acid leaching using considerable quantities of caustic chemicals such as sulphuric acid and ammonia and these understandably provide concerns for safety and spillage.

Environmental issues of laterite mining were recognised in the Philippines where a government executive order in July 2010 placed a moratorium on new mining projects. A proposal by the country's Mining Industry Coordinating Council to lift the ban was rejected by Philippine President Rodrigo Duterte in November 2017.

Indonesia is the world’s largest nickel producer with most production from processing nickel-cobalt laterite ore. The Indonesian Government, concerned by damage to the environment, recently announced its intention to prohibit dumping of mine waste in the ocean, a common practice at many of the island nation’s laterite mines. Without permits for deep-sea tailings disposal some planned nickel-cobalt projects are unlikely to progress and others will be affected by costly land-storage options in Indonesia’s high rainfall climate.

Land area affected by mining

Australia has more than 6,500 square kilometres of land affected by all types of mining and ranks second in the world after China. Although large coal and iron ore mines contribute to land disruption Australia’s laterite nickel-cobalt deposits are widespread and future development of laterite resources will expand Australia’s mine footprint, often within areas of ecological sensitivity.

However, the BHCP consists of steep-dipping pyrite-(cobalt) sulphide lenses which according to COB’s mining studies can be excavated by open cut openings covering a combined area of one square kilometre, which is about 1.5% the area of the Murrin Murrin laterite deposit.

Benefit of concentration

The 4 million tonnes of laterite ore mined at Murrin Murrin each year are recovered through shallow, open cut mining and processed using high-pressure sulphuric acid-leaching (HPAL) technology and refining. The project includes a 90MW power station, 4,400 tonnes per day acid plant, 6 tonnes per hour hydrogen sulphide plant and a reverse osmosis water treatment plant. The HPAL circuit consists of four titanium lined autoclaves which operate under high pressure (up to 44 Bar), high temperature (255o C) and uses concentrated sulphuric acid.

The rock to be mined at BHCP will have a similar cobalt head grade to Murrin Murrin ore but by using conventional processes cobalt content can be improved by producing a pyrite concentrate with average grade of 0.45% cobalt, 40% iron and 45% sulphur. This simple concentration step removes 80% of waste product, meaning that the BHCP refinery is only 20% of the capacity of the mine (a laterite ore mine needs to process the majority of its mined production, leading to larger processing and capital costs).

Each year planned processing of one million tonnes of concentrate will allow for a considerably smaller process plant and lower capital and processing costs than a laterite mine with comparable cobalt production. COB’s innovated pressure oxidation is undertaken at much lower pressure (10 Bar) and temperature (130o C) than HPAL processing of laterite ore.

Cobalt value is currently approximately 2.5 times of nickel.  Murrin Murrin produces about 12 times more nickel than cobalt and is similar to other HPAL laterite projects. While laterite cobalt producers have been able to increase emphasis on cobalt production, they are primarily nickel mines.

Cost comparisons

Start-up at Murrin Murrin HPAL laterite mine commenced in 1999 but a string of technical issues meant that its annual nameplate capacity of 45,000 tonnes of nickel was not reached despite accumulated capital costs of about US$1,700 million. Glencore reported 2018 production of 3,244 tonnes of cobalt and 39,717 tonnes of nickel.

Cobalt Blue’s recently updated engineering study for the BHCP estimates a capital cost of US$392 million to produce 3,500-4,000 tonnes per annum of cobalt as battery-grade cobalt sulphate and mixed hydroxide products together with 300,000 tonnes of pelletised sulphur to replace imported sulphur supply to a spectrum of Australian industries.

Benefits for Australian mining

To remain a top tier cobalt producer without the environmental and supply issues faced by other nations Australia must develop new sulphide cobalt projects like the BHCP. This is because HPAL processing of nickel-cobalt laterites like Murrin Murrin is technically challenging (high autoclave pressures and temperatures) with considerable ramp-up period, high capital intensity and rare achievement of nameplate capacity.

Nickel mines with cobalt by-products are dependent on nickel price fluctuations irrespective of cobalt prices and depressed nickel prices may result in mine closure despite a positive cobalt market.

Sulphide cobalt deposits like the BHCP benefit from pre-processing ore concentration, smaller footprint, lower energy use and less water consumption than HPAL producers as well as from the integral environmental advantages that these differences afford. Inclusion of the BHCP in the Australian Government Critical Minerals Prospectus 2020 and recently, the NSW Government Minerals Strategy are testament to the importance of the project.

Cobalt Blue’s innovative patented ore processing can also provide similar environmental and cost benefits to other metal sulphide deposits. COB has successfully tested ores from several undeveloped copper, cobalt and gold deposits with impressive metal recoveries and costs.

Update on COB progress

A pilot plant to treat 90 tonnes of BHCP ore and produce approximately 15 tonnes of pyrite concentrate for downstream processing is on track to be completed at Broken Hill in several weeks. The plant will supply varying specifications of cobalt products (including mixed hydroxides and sulphates) as direct test samples for lithium-ion battery producers.

The project on the way to gaining State Significant Development Status and this will help streamline intended 2021 feasibility studies and subsequent project development.

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