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A major expansion is definitely in the cards to restart a mothballed refinery in northeastern Ontario that's gearing up to serve the electric vehicle market.
Toronto's First Cobalt is skipping a staged approach to reopening the plant, situated outside the town of Cobalt, and is opting instead on focusing their construction efforts on quadrupling production capacity.
The plant is currently configured to process 12 tonnes of cobalt sulphate a day. Expansion would boost that to 55 tonnes and would represent five per cent of the world's cobalt refining capacity.
Through a restart study, the company has been finetuning its processing plans and is looking to ways to shave costs off the US$56 million needed to bring the former Yukon Refinery back into operation as a toll processing facility. It would handle cobalt feed from mines around the world.
The plant would convert cobalt hydroxide into a highly pure, battery-grade cobalt sulfate material which is used in the manufacturing of batteries for electric vehicles, as well as other electrified consumer and industrial applications.
This would be the first cobalt refinery in North America. China accounts for close to 80 per cent of the world's refined cobalt sulphate production but U.S. electric vehicle makers want to source this material closer to their manufacturing plants.
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First Cobalt acquired the plant three years ago as part of a merger deal soon after it began staking prospective cobalt ground around some former silver mines in the area.
Last year, First Cobalt struck a five-year agreement with mining giant Glencore to treat cobalt feed from its mines in the Democratic Republic of Congo. In return, Glencore is providing all the capital necessary to recommission and expand the facility.
The objective is to produce 25,000 tonnes of cobalt sulfate a year for the electric vehicle market.
First Cobalt considered restarting the plant as a small-scale demonstration plant, producing samples of cobalt sulphate for electric vehicle manufacturers. They've now decided that would be several million dollars in unnecessary expenses.
The refinery is located on 120 acres five kilometres outside the town of Cobalt. It was first permitted in 1996 and operated on and off by another company until 2015, producing a cobalt carbonate product and other refined nickel and silver material.
First Cobalt's strategy is to use the revenue raised from the refinery to explore and develop its own cobalt properties in northeastern Ontario and Idaho.
The company is seeking permit amendments for storing dry-stack tailings on the property and doing metallurgical test work to improve cobalt recoveries.
First Cobalt said they've finished a first round of discussions to identify other potential parties that could partner with Glencore to finance the refinery's capital requirements and other outside feed material for the plant.
In its release, First Cobalt gave no clear timetable on construction and expansion. Previously it said if they went with the demonstration plant first, a production restart could begin later this year or early 2021. The expansion scenario, the company said, likely wouldn't happen until the end of 2021.
"I am pleased by this outcome as an on-site demonstration plant would have resulted in higher capital costs, a longer development timeline and limited benefits to the project," said Trent Mell, president-CEO of First Cobalt, in a July 22 news release.
"Meanwhile, the engineering optimization work has identified opportunities to reduce the operating costs of the refinery and the financing talks are progressing. We have received several third party financing proposals and we will now seek to narrow the field in order to commence three-way discussions with our strategic partner."
