(Reuters) – Brazil’s Vale on Monday unveiled a $690 million financing to expand a Canadian nickel mine, agreeing to sell unmined cobalt from Voisey’s Bay as a booming electric vehicle market propels demand for the critical battery ingredient.
Vale said it would sell cobalt mined after 2021 as a by-product from the mine in Canada’s northern Labrador region to Wheaton Precious Metals Corp and Cobalt 27 Capital Corp in a so-called stream financing deal.
The transaction is the world’s biggest cobalt stream to date, a form of alternative financing that allows an investor to make an upfront payment in exchange for future production at a discounted price.
From an obscure minor metal and salt probably best known for dyeing porcelain blue, cobalt has stormed to the forefront of the mining industry due to its importance in prolonging battery life and providing stability to rechargeable batteries used in electric vehicles and electronics.
Cobalt prices have soared fourfold over the past two years to close to $100,000 a ton on expectations of demand spiking for limited supply that is mostly mined as a by-product of copper mines in Democratic Republic of Congo, a perpetually politically unstable country.