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Editorial Coverage: The United States — and the entire world —
have become critically dependent on cobalt, which is essential for
rechargeable lithium ion (Li-ion) batteries to retain and discharge
electricity.
- Cobalt deemed critical for United States security and economic
prosperity
- Cobalt need expected to increase with soaring Li-ion battery
demand
- U.S. business and military dependent on unstable cobalt
sources; North American initiatives seek solutions
In May, cobalt was added to the United States’ list of minerals critical to its security and economic
prosperity. Far beyond laptops, phones and electronic gadgets, the
Li-ion battery is increasingly important for electric grid power
storage and the revved-up electric vehicle market, as well as
military applications such as tactical radios, thermal imagers,
portable computing and turbine blades in gas turbines and aircraft
jet engines.
The United States doesn’t currently mine or refine any
meaningful amounts of cobalt, and yet it’s expected that within the next five years Li-ion batteries will be
utilized in heavy-duty military platforms, such as vehicles, boats
and, eventually, aircraft and missiles. The demand and critical
importance of cobalt is only expected to increase as the Li-ion
battery quickly moves toward ubiquity in civilian computerized
applications as well. First Cobalt Corp. (TSX.V: FCC)
(OTCQX: FTSSF) (FTSSF
Profile) owns and is developing significant North
American cobalt-indicated assets. First Cobalt also owns the only
permitted cobalt refinery in North America capable of producing
battery-grade materials, and just released the
results of three studies supporting a possible restart of the
refinery. Global battery makers Panasonic Corporation (OTC:
PCRFY), LG Chemical Company, Ltd. (OTC:
LGCLF) and Johnson Controls International PLC
(NYSE: JCI) rely on cobalt to produce and meet burgeoning
Li-ion demand. Even the Boeing Company (NYSE: BA)
has invested in battery technology to sustain high-energy density
in its first steps toward battery-powered flight.
To view an infographic of this editorial, click here.
Critical Cobalt and Blood Diamonds
For more than 20 years, seven African countries endured brutal
civil conflicts fueled by diamonds. Civil wars in the Democratic
Republic of Congo resulted in the death and displacement of
millions of people. “Blood diamonds” helped finance the carnage and
led to rampant human rights abuses, as opposing forces sought to
gain control of the resource-rich DRC.
Though the wars have subsided, cobalt-rich DRC still reportedly
has serious political and ethical problems compromising its place
in the minerals market. The world’s largest
producer of cobalt, the Republic allegedly uses child labor to
procure the mineral in the country’s artisanal mines. EV
automakers, battery producers and big tech companies are struggling to keep cobalt sources flowing yet free
from abusive child labor. The Responsible
Cobalt Initiative is the beginning of that movement.
Secure Ethical Resources
First Cobalt
Corp. (TSX.V: FCC) (OTCQX: FTSSF) adopted the
Responsible Cobalt Initiative in 2017 and is intently developing
North American-based cobalt resources. From raw product to refined
chemicals, First Cobalt is rapidly building an economically and
politically secure North American cobalt company.
The company owns three substantial North American assets. First
Cobalt’s flagship asset, Iron Creek Cobalt Project in Idaho, has an
exceptionally promising inferred mineral resource estimate of 29.6
million tons grading 0.11 percent cobalt equivalent. In fact, the
company announced the
outstanding results of its first NI 43-101 Mineral Resource
Estimate for the 100 percent-owned property in September, stating
the site contains 45 million pounds (20,411 metric tons) of cobalt
and 175 million pounds (79,379 metric tons) of copper for 62.9
million pounds (28,528 metric tons) of cobalt equivalent. In
addition, First Cobalt owns an immense land package composed of 50
past-producing mines in the renowned Canadian Cobalt Camp – an area
in Ontario thought to be a cobalt trove and ripe for revival.
North American Cobalt Refining
First Cobalt’s other significant asset is its currently
shuttered but past-producing cobalt refinery with significant
potential. The company is the sole owner of the only permitted
cobalt refinery in North America capable of producing battery-grade
materials, and First Cobalt is now taking actions to investigate a
restart of this invaluable asset.
The facility is a hydrometallurgical cobalt-silver-nickel
refinery that was first commissioned in 1996. The facility is fully
permitted for processing feedstocks from that contain elevated
concentrations of arsenic, which is common in most of the potential
material from North America. Trying to permit a similar facility in
North America today would require other companies to invest a
substantial amount of both time and capital.
In fact, a 2012 report prepared for a previous owner estimated
the replacement value of the First Cobalt Refinery at US$78
million, excluding the capital invested in power lines and
earthworks related to the tailings facility and roads. Amazingly,
the intrinsic value of the refinery asset alone is about equal to
the company’s current total market capitalization. The underlying
value of the First Cobalt Refinery will likely be realized once
back online in production.
First Cobalt just released the
results of studies supporting a restart of the First Cobalt
Refinery. The three independent studies were commissioned to
estimate capital requirements and operating costs, permit renewal
timelines, potential feedstock options and offtake opportunities.
The studies determined under a base case scenario that the refinery
could produce from 626 to 1,171 tons of cobalt per year. The
refinery could produce cobalt sulfate for the lithium-ion battery
market or cobalt metal for the American aerospace industry and a
permitting review concluded that a restart is possible within 18
months of selecting a feedstock under the base case scenario. The
First Cobalt Refinery project team is continuing to work with
engineering firms, process experts, a cobalt marketing expert and
financial advisers to finalize a business plan to restart the
facility.
President and CEO Trent Mell stated, “The First Cobalt Refinery
is a strategic North American asset and potentially our quickest
path to cash flow by producing cobalt materials for the North
American market. The facility is in excellent condition with
permits in place and a short timeline to potential production, as
well as optionality for both sources of material and refined
product. Future offtake partners may offer flexibility with
financing options to minimize dilution as we move forward. We
believe that the single best use of the refinery is to provide
cobalt for the U.S. market, which does not currently produce a
meaningful supply.”
The Take Away
Cobalt is now regarded as critical to the security and economic
prosperity of the United States. The ability of the First Cobalt
Refinery to process materials and produce cobalt battery materials
or cobalt metal products has the potential to de-risk North
American cobalt projects and provide U.S. cobalt consumers verified
ethical materials. Importantly to investors, if the refinery is
restarted, the value of the asset could increase substantially once
it is back online in production.
Cobalt Consumers
Johnson Controls International PLC (NYSE: JCI)
offers a portfolio of lithium-ion battery technology for a range of
vehicles. With global manufacturing facilities, it provides
lithium-ion batteries to power and energy needs around the world.
The company is a global diversified technology and multi-industrial
leader serving a wide range of customers in more than 150
countries.
Panasonic Corporation (OTC: PCRFY) is a
worldwide leader in the development of diverse electronics
technologies and solutions in consumer electronics, housing,
automotive and B2B businesses. Panasonic is the exclusive battery
cell supplier for Tesla’s current production models. The company
sees Li-ion batteries as central to its plan to significantly boost
automotive business revenue.
Korea’s leading manufacturer of advanced batteries, LG
Chemical Ltd. (OTC: LGCLF), announced
that it is building an electric vehicle battery plant in Poland,
which will be the first such plant in Europe. Once the plant is
built, LG Chem will have a global production system of four
internationally located plants. LG Chem aims to be a global market
leader manufacturing batteries for pure high-performance EVs.
The world's largest aerospace company, the Boeing
Company (NYSE: BA), manufactures commercial airplanes and
defense, space and security systems. Products include commercial
and military aircraft, satellites, weapons, and electronic and
defense systems. Boeing uses batteries for energy storage in nearly
all its platforms, including airplanes, helicopters and
satellites. Boeing recently invested in a new
battery technology to sustain high-energy density and allow the
possibility of electrifying some aspects of air transportation in
steps toward battery-powered
flight.
For more information about First Cobalt Corp, please visit
First Cobalt
Corp. (TSX.V: FCC) (OTCQX: FTSSF)
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