The $900 million Syerston cobalt and nickel project in central west NSW will be in the spotlight at the world’s biggest mining investment conference this week as billionaire mining explorer and promoter Robert Friedland talks up its potential to help feed accelerating electric vehicle demand.
Mr Friedland, the US-born, Canadian founder of Ivanhoe Mines, was the driving force behind the establishment of Rio Tinto’s Oyu Tolgoi copper and gold mine in Mongolia and was last year appointed co-chairman of Melbourne-based Clean TeQ, which owns Syerston.
The renowned mining entrepreneur is now making the mine the focus of his famously infectious briefings, telling delegates at the African Mining Indaba conference in Cape Town that Syerston will be the first mine developed to exclusively supply the global lithium-ion battery industry with nickel and cobalt.
In slides lodged with the Australian stock exchange before the conference, Mr Friedland said lithium-iron batteries were essentially cobalt and nickel batteries, with the two elements making up about 20 per cent of the cost of the batteries — compared with about 4 per cent for lithium. “Syerston is uniquely positioned as one of the largest and highest-grade sources of cobalt outside Africa,” Mr Friedland, who owns 19.35 per cent of Clean TeQ, said in the slides.
Cobalt prices are up 65 per cent this year and trading at a five-year high of $US37,500 a tonne on the back of their exposure to growth in battery demand. Yesterday, Clean TeQ shares rose 4c, or 6 per cent, to a fresh high of 72.5c, up 42 per cent for the year and giving the company a market value of $347m.
Syerston, about 50km northeast of Condoblin in the central west of NSW, will average 18,730 tonnes of nickel and 3222 tonnes of cobalt over its first 20 years, making its cobalt content a lot higher than what is traditionally found in nickel and cobalt deposits.
Mr Friedland said a global move to electric vehicles, driven by carbon pollution concerns, was likely to be hastened by a move away from diesel, which has high nitrogen oxide emissions that are significant contributors to air pollution.
“Electric vehicle drivetrains are forecast to become competitive with combustion engines within five to 10 years,” he said.
The growing trend towards electric vehicles has spurred graphite and lithium booms in recent years.
But Panoramic Resources managing director Peter Harold, who is studying restarting the Savannah nickel and cobalt mine in Western Australia’s Kimberley region, said electric vehicles were also expected to boost demand for nickel and cobalt.
“People have been focused on graphite and lithium, but cobalt and nickel are going to play a big part and I think demand could come on a lot quicker than everybody thinks,” Mr Harold told The Australian yesterday.
“There are forecasts the cobalt market will grow substantially and electric cars could account for 200,000 tonnes of annual nickel market growth, or 10 per cent of the global market.”
He said there were some forecasts a tipping point, where electric vehicles were competitive with petrol and diesel, could come in three to five years.
According to Clean TeQ, Syerston is the biggest cobalt deposit in a listed vehicle outside of Africa, with all key permitting complete and a definitive feasibility study scheduled for the fourth quarter of this year.
The company says about two-thirds of the world’s cobalt comes from the Democratic Republic of Congo, including much that is mined by hand, sometimes by women and children.
This is putting pressure on battery users, such as Apple and carmakers, to be seen to be cleaning up supply chains or using alternative sources.
It would not be surprising if Mr Friedland’s appearance at Indaba promotes new interest in Clean TeQ.
Although Andrew Forrest has eclipsed him in wealth with the success of Fortescue Metals Group, Mr Friedland remains the benchmark for a mining tycoon showman with a decent project, having promoted successful projects time and time again.
His track record includes the Voisey’s Bay nickel discovery in Canada and the Fort Knox gold project in Alaska, as well as Oyu Tolgoi.
Panoramic last week completed a feasibility study that said Savannah, which was closed last year because of low nickel prices, could restart at a capital cost of just $20m.
Mr Harold said a plan to split the concentrate streams into nickel/cobalt and concentrate could bring the operating costs down to a level where it was economic at current prices.
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