A deal with Vale over cobalt marks the first time that Wheaton Precious Metals has moved outside the gold and silver space
Cobalt has given the Voisey’s Bay mine — one of the world’s largest nickel deposits — in Newfoundland and Labrador a new lease on life this week in yet another sign of the growing influence that the electric vehicle industry already exerts on global supply chains.
Brazilian giant Vale SA on Monday announced it will sell most of the mine’s future cobalt production for US$690 million to finance a long-delayed $1.7-billion expansion, which will add an underground component to the mine and extend its life by 15 years.
Cobalt, long considered an industrial metal used as an alloy in jet engines and natural gas turbines, is increasingly in demand for use in lithium-ion batteries. Forecasts that the electric vehicle industry is set for major growth over the next decade have increased cobalt prices by more than fourfold during the past two years to US$80,000 per ton.
The Vale deal shows how rising cobalt prices can transform the economic viability of a mine. Last August, Vale put the Voisey’s Bay expansion on hold as nickel and copper prices (the two primary metals mined there) sagged. Prices for both metals have since rallied, but Vale said it is de-risking the project by using the proceeds from cobalt, a byproduct metal, to finance 40 per cent of its expansion.
The deal also marks the first time that Vancouver-based Wheaton Precious Metals Corp., which is leading the investment, has moved outside the gold and silver space.