Long before electric vehicles (EV) were even on the horizon, an exploration venture called Formation Capital Corporation (FCC) in the 1990s began poking holes in the ground for cobalt, next door to the proposed Superfund site at the Blackbird Mine, southwest of Salmon. On Oct. 7, the successor to FCC opened a cobalt mine on that exploration site in a ceremony that included Idaho’s governor and the Australian Ambassaor to the United States.
Cobalt is an essential element for modern high-storage batteries. It also has strategic importance in military applications. Currently, China controls the global refining and market price of this strategic mineral. No one has mined cobalt in the U.S. since the 1980s, when the Blackbird Mine southwest of Salmon shut down. This is why the opening of America’s first cobalt mine on Oct. 7 is a big deal.
30 years in the making
The owner of the new mine is the Australian firm of Jervois Global Ltd. with its corporate headquarters in the coastal city of Melbourne in southeast Australia. The company acquired FCC when it merged with its parent company, Canadian firm eCobalt, in 2019. In addition to the mine in Idaho, Jervois owns a nickel and cobalt refinery in Brazil and a cobalt products manufacturing facility in Finland.
FCC began its exploration program for cobalt in 1993 in the Idaho Cobalt Belt 25 miles west-southwest of Salmon. The resource it uncovered was sufficiently rich in copper, gold, and cobalt that the firm transitioned to developing the site for mining. The company dubbed the nascent mine as the Idaho Cobalt Project (ICP).
The seriousness of its intent was demonstrated when the ICP received its waste water discharge permit in 2007 from the U.S. Environmental Protection Agency, overcoming one of the most significant hurdles on the road to becoming a viable mine. The company developed the property through 2018, when it curtailed activities due to the bottom failing out of the global cobalt prices in 2019 because of Chinese manipulation of the market.
The cobalt price plunge doomed eCobalt’s plans to build a refinery facility in Blackfoot. The company considered sites in Kellogg and Blackfoot, eventually buying a property in unincorporated Bingham County with a Blackfoot zip code. According to Blackfoot’s community development director, Kurt Hibbert, construction materials that eCobalt purchased for the facility are still stockpiled on the building site. The city is the provider of water and wastewater utilities for the area.
After Jervois took over FCC’s properties through its acquisition of eCobalt, the new owner changed its plans to using the refinery in Brazil. Jervois told the Idaho Business Review a year ago that is had not ruled out using the property in Blackfoot, stating in an email: “There are pre-treatment routes for cobalt concentrate involving our site in Blackfoot that remain on the table.”
Idaho Cobalt Operations
When Jervais took over the ICP, it renamed the mine as the Idaho Cobalt Operations (ICO). Most of the mining at the ICO will be underground. The visible structures at the mine, on a mountain top at 8,100 feet elevation, are support buildings for the mine, tailings ponds and storage, and pre-concentration facilities.
Jervois currently estimates that the active mining phase of operations will have a seven-year life. The mine expects to reach full operating capacity in the first quarter of 2023.
The ICO mine is right next door to the inactive Blackbird mine. Beginning in the 1893, multiple mining companies extracted cobalt and copper at Blackbird using both underground and surface mining. When the last mine owner shut down in 1982, the site was riddled with underground workings and a large open pit, as well as tailings that poisoned tributaries to the Salmon River with acid mine drainage and heavy metals. The damage killed all aquatic life in Panther Creek, one of the tributaries affected. The site was remediated between 1993 and 2012 and is surveyed every five years to determine the effectiveness of remediation measures.
The Clean Water Act of 1970 and the Surface Mining Act of 1977 paved the way for new methods of mining and restoration that govern the industry today. Unlike the old style of mining that allowed most of the former miners at Blackbird to walk away, Jervois has $44 million set aside for regulated environmental restoration activities once mining is finished at the site.
Jervois has also established a partnership with the Idaho Conservation League to develop the Upper Salmon Conservation Action Program (USCAP) to protect and restore the Upper Salmon River basin. The USCAP will fund projects to protect and enhance the mountains and Salmon River in the region of the mine, with Jervois Mining USA contributing $150,000 per year through the operational life of the ICO mine. The USCAP is separate from and unrelated to the mitigation measures and other regulatory requirements applicable to ICO.
Opening the mine
Due to its strategic importance, the opening ceremonies on Oct. 7 included Gov. Brad Little and the Australian Ambassador to the U.S. the Hon. Arthur Sinodinos, Under Secretary for Science and Innovation at the U.S. Department of Energy Dr. Geri Richmond and the Deputy Assistant Secretary for Textile, Consumer Goods and Materials in the U.S. Department of Commerce Jennifer Knight.
During the ceremonies, Little remarked: “The opening of the Idaho cobalt operations is an exiting step forward for our state and our country, and we congratulate Jervois on this important milestone. The United States of America needs access to a domestic supply of critical minerals to promote energy independence and reduce our reliance on countries like China that control the market on cobalt and other resources necessary for everyday life. Idaho has the capability of meeting our country’s mineral demands through responsible, modern-day practices. This project will further boost the economy and support a strategic national supply of critical minerals.”
Cobalt is a big deal for Idaho
The world of electric vehicles (EV) and sustainable renewable electric power will run on cobalt. For example, the current cobalt content of a standard battery pack for a Tesla Model S or Model X is approximately 44 pounds, according to the U.S. Department of Energy. The demand for EV batteries is expected to grow between 12% to 30% annually over the next several years.
Cobalt is listed in the Federal Register as a critical mineral. The last time cobalt was mined in the United States was in 1982, at the Blackbird Mine in the mountains southwest of Salmon, located on the northwest end of what is known as the Idaho Cobalt Belt.. The Blackbird Mine embodied most of the old practices of mineral extraction that created acid mine drainage and killed off aquatic life in local surface waters. It has since been cleaned up.
Idaho Cobalt Belt is the largest unmined cobalt resource in the U.S. This feature is a 40-mile long, one-to-two-mile wide trend of cobalt, gold and copper mineralization sufficiently enriched to be economic to mine when the price of cobalt is high enough to support mining activities.
In industrially advanced economies with fair labor laws and environmental regulations, cobalt needs to be above $40,000 per metric tonne (~$25/pound) to be profitable. This was the price basement below which mining and refining firms mothballed their operations in 2018 to 2019, according to the U.S. Geological Survey (USGS) commodities reports.
One example of profitability phenomenon, described by the USGS in its 2020 mineral commodity report for cobalt: “In early August, a Switzerland-based producer and marketer of commodities announced that, owing to low cobalt prices, it planned to place its world-leading cobalt mine on care-and-maintenance status by year end 2019.” With inflation, this basement profitability level has certainly risen.
The USGS reports that the bulk of the world’s cobalt reserves, over 70%, in are in the Democratic Republic of Congo (DRC). Livewiremarkets.com described the cobalt situation in 2021 as thus: “The biggest influence on the cobalt market is the reality that 75% of supply emanates from the Democratic Republic of Congo (DRC) — which is not so democratic and altogether unpleasant. The output is also controlled by Chinese intermediaries.”
Most of the DRC cobalt has been bought up by China, which owns the bulk of the world’s cobalt refining capacity. Over 80% of the cobalt feeds China’s battery manufacturing industry. The DRC-China couplet controls the price and the supply of cobalt globally. The cobalt crash of 2018-19 is a an example of how this currently works. At the start of 2017, cobalt was selling for $40,000 per metric tonne (~$18/pound) on the London Metals Exchange (LME), which is the leading global mining commodities market. Because of increasing demand for cobalt, the price of cobalt skyrocketed to over $95,000/tonne by March 2018.
With this surge in prices, cobalt production in the DRC exploded, which fed the cobalt refineries in China. This resulted in an oversupply of refined cobalt in China. Chinese refineries dumped the excess cobalt, dropping the bottom out of the market in the latter half of 2018. By December 2018, the LME price of cobalt had fallen to $55,000/tonne (~$25/pound).
In January 2019, the price had dropped to below $30,000/tonne (~$13.60/pound). By August 2019, cobalt prices bottomed out at $26,000/tonne (~$11.80/pound). The price crash caused firms outside of the DRC-China pairing to mothball their cobalt operations, lest they bleed themselves out of business.
Unless the rest of the world can insulate itself from this market-controlling pair of countries, the cobalt market will remain susceptible to what these two nations do with their cobalt production. As one of the locations with known cobalt reserves, Idaho is positioned well for a resurgence of cobalt mining that’s outside of the DRC.
In addition to the ICO mine, other firms are actively exploring in the Idaho Cobalt Belt, with the Canadian firm Electra Battery Materials (formerly First Cobalt Corp.) being the farthest along. Electra is actively exploring its claims on the southwest end of the belt around Iron Creek. Electra is also putting its own cobalt refining and recycling facility back online in Ontario, with a projected start-up date of December 2022.