Ground Breakers: A new cobalt refinery, a native title deal and a new CEO in the copper hot seat
Jervois Global’s (ASX:JRV) September quarter could have been a case of the less said the better, generating an unaudited loss of US$25.5 million on a 32% drop in realised cobalt prices at the Finnish operations it paid Freeport a pretty penny for last year.
That was around US$160 million btw.
But the shareholder reaction to the update wasn’t too dour, perhaps because of the positive tone the company, one of only a handful globally focused primarily on cobalt, struck on the future of the battery metal’s market.
Jervois partially blamed a lack of semiconductors for sluggish battery market sales, but said a wave of demand was coming.
“Looking to 2023, Jervois’s customers will carry inventory across the remainder of 2022 and into early 2023, and cobalt sales are expected to begin accelerating across next year as the situation both improves, and electric vehicle penetration rates continue to rise,” the company noted.
“Jervois’s commercial team are in active negotiations with major European, US and Japanese battery plants regarding a significant uptick in cobalt demand that is steadily projected across 2023, and then aggressively from early 2024.”
(Word to the wise, investors love the word ‘aggressive’ and variations of such).
LME cobalt prices hit a recent low in mid August of US$47,000/t but have traded at a lick under US$52,000/t since the start of September.
Jervois has reaffirmed its belief in the cobalt demand story again today with a fully underwritten $231 million cap raising and FID on its Sao Miguel Paulista refinery in Brazil.
With first production expected from the restarted plant in Q1 of 2024, the project is expected to deliver 10,000tpa of nickel and 2000tpa of cobalt metal cathode in its first stage.
It comes with commissioning underway in Idaho at the only cobalt mine in the US, where nameplate capacity is expected to be hit by the end of the March quarter.
Jervois has been strongly backed by its largest shareholder AustralianSuper, which will participate in up to 24% ($55.6m) of the raising, with commodity trader and third largest stockholder Mercuria committing to invest $16.2m, and board and management tipping in $2m.
Located in Sao Paulo, Brazil, the plant is expected to cost around US$55m, with a US$10m contingency for capex escalation taking the job out to US$65m.
The raising also strengthens JRV’s hand ahead of key negotiations with OEMs and other nickel and cobalt customers, the company said. It had US$42m in the bank as of October 31.
Rio Tinto’s (ASX:RIO) indigenous relations mea culpa continues after the destruction two and a half years ago of the Juukan Gorge rock caves, modernising an agreement with the Yindjibarndi People in the Pilbara.
The participation and land use agreement has been in place since 2013, covering 350km of rail from Rio’s mines to port at Cape Lambert and Dampier.
“We are working hard to re-engage with Traditional Owners and change the way we operate,” Rio iron ore chief Simon Trott said.
“This agreement with the Yindjibarndi people is the first delivered as part of our commitment to modernise our relationship with Traditional Owners on whose land we operate.
“It is a demonstration of our commitment to working differently and truly partnering with Traditional Owners to support the achievement of their goals and aspirations. I look forward to seeing what we can achieve with the Yindjibarndi people over the years to come.”
“This new agreement represents a true partnership demonstrating mutual trust and commitment where we both apply our best resources to engage, plan and deliver outcomes that can improve the lives of Yindjibarndi members,” Yindjibarndi Aboriginal Corporation CEO Michael Woodley said.
“The partnership will help build resilient and prosperous communities, strengthen our spiritual and cultural heritage, and, through strategic business partnerships, create a successful economic model for self-determination for the Yindjibarndi Nation that can endure for generations to come.”
One of the few pure play copper exposures on the ASX, Sandfire Resources (ASX:SFR) has long been synonymous with the verbose and energetic Karl Simich, who has led the miner since its days as a penny pinching junior before its remarkable DeGrussa discovery in WA’s Doolgunna province.
Simich said adios this year after well over a decade, not long after securing the MATSA copper, zinc, lead and silver mines in Spain in what was at the time a $2.6 billion deal.
There is now a new man in the hot seat, with Brendan Harris hopping over from fellow copper (among other things) miner South32 (ASX:S32).
The former CFO and most recently head of HR and commercial at S32 will start in his role at Sandfire on April 3 next year, with acting CEO and COO Jason Grace to hold the fort ’til then.
Harris is expected to begin a little over two months after the closure of the DeGrussa mine, with the company to produce in excess of 100,000t of copper a year after the ramp up of its new Motheo mine in Botswana.
Both Motheo and MATSA have mine lives in excess of a decade.
“I feel incredibly privileged to be joining Sandfire at such an exciting time in its evolution as a global copper producer, with the MATSA Copper Operations in Spain and the Motheo Copper Mine in Botswana providing the foundation to grow copper production safely and responsibly as demand benefits from the electrification of the global economy,” Harris said.
“I look forward to leading the Sandfire team and building on the company’s strong safety track record, outstanding operating credentials and positive relationships with its surrounding communities to ensure that tangible value is created for all stakeholders.”
Sandfire was up 3.5% on what has been an ordinary day for mining stocks so far after a couple of very strong ones.
The materials sector is down 1.47% with energy 1.65% lower.
Utilities are up the wazoo, rising 12.89% on Brookfield and EIG’s $9 per share indicative takeover offer for Origin Energy (ASX:ORG).
The deal would see Brookfield run the energy business, with EIG’s MidOcean Energy to take on its LNG business.
The power provider’s shareholders are currently gawking at the 54.9% offer, which values its shares are $18.4 billion buckaroos. ORG is up 33%.