Glencore, Chilean Cobalt sign offtake for Americas supply

[Ben Graham]

United States-based Chilean Cobalt (US-OTC: COBA) said Thursday it has signed a life-of-mine offtake with a Glencore (LSE: GLEN) subsidiary for all the cobalt and copper from the La Cobaltera and El Cofre projects in northern Chile.

The parties expect most intermediate products to be shipped to privately held US Strategic Metals’ hydrometallurgical battery metals processing facility in Fredericktown, Missouri. The facility is to produce about 3,000-5,000 tonnes cobalt per year compared with the 8,000-10,000 tonnes of current US imports.

US Strategic Metals, Glencore enter processing partnership with Chilean Cobalt

“We believe that working with Glencore, one of the world’s leading producers and marketers of cobalt and copper, will satisfy a key condition precedent as we pursue strategic project financing,” Chilean Cobalt chairman and CEO Duncan Blount said in a press release.

The deal ties new Americas supply to a market recently rocked by oversupply and policy-driven caps. A cobalt export ban by the Democratic Republic of Congo – which started in February – was extended twice and a new quota regime began in mid-October that could limit exports to roughly half of 2024 levels, according to company materials. This creates a setup that, combined with low inventories, could flip the market into a deficit situation by next year.

China’s grip on processing is the other pressure point. More than 60% of processed cobalt and about 40% of refined copper capacity are in China, while over 75% of mined cobalt (and about 15% of mined copper) come from the DRC, Benchmark Mineral Intelligence data shows. Indonesia is now the number two cobalt source and many assets across the DRC and Indonesia are Chinese owned. That concentration risk underpins Chilean Cobalt’s emphasis on a US refining path.

Chilean Cobalt’s New York traded shares soared 39% to $0.45 apiece on Thursday, giving the company a market capitalization of about $20 million. The stock has traded between $0.01 and $1.20 over the past 12 months.

Americas cobalt supply

La Cobaltera–El Cofre sits in Chile’s historical San Juan cobalt-copper district. The deposits host structurally controlled cobalt-copper vein and manto-type mineralization in metamorphic basement rocks along the Atacama Fault Zone/Infiernillo shear trends, a high-grade camp with veins historically above 6% cobalt.

In September, Chilean Cobalt agreed to acquire El Cofre from Fuerte Metals’ (TSXV: FMT) Cobalt Chile subsidiary for $1.89 million paid in 4.5 million Chilean Cobalt shares. The new owner hasn’t yet published a compliant mineral resource estimate for these assets.

Company plans call for a phased restart to mining on the assets, targeting 10,000 tonnes per day throughput and projected annual output of 3,000–5,000 tonnes of cobalt and 20,000–25,000 tonnes of copper over 10–15 years.

The capital required for the build is projected to be $300–$400 million. The company says it has a $317 million letter of interest from the US EXIM Bank covering about 80% of the first-stage capital expenditures.

Glencore is expected to provide “strategic support” on the first-stage build and US processing initiatives, Chilean Cobalt said.