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Neometals to build cobalt recovery plant in Canada

The company will be able to participate in the surging cobalt market.

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A scoping study valued the operation at US$84 million

Neometals (ASX:NMT) will build a pilot plant in Canada to accelerate the commercialisation of its technology to recycle lithium ion batteries to recover high value materials such as cobalt.

The scoping study estimated operating cost of US$4.45 per pound contained cobalt, leaving a significant margin compared with the current spot prices of circaUS$24.50 per pound.

Agreements have been executed to construct the pilot-scale hydrometallurgical plant in Montreal with the plant expected to be operational in July.

Chris Reed, managing director, commented: “With the Mt Marion Lithium Project successfully in production, Neometals’ will accelerate the commercialisation of this environmentally and ethically responsible, end-of-life solution for lithium battery recycling.

“We will apply our knowledge and technology to recover and re-use lithium battery materials and create a more sustainable, circular sourcing solution for potential partners.”


Scoping study highlights

Neometals has co-developed a technology to economically recover high-value cobalt (99.2% recovery) as a material that can be re-cycled within the battery manufacturing chain.

Agreements have been executed to construct the pilot-scale hydrometallurgical plant at Neometals’ Montreal laboratory.

The plant, which is anticipated to be operational in July, will complete continuous test work at a rate of 100 kilograms per day of batteries, testing the recovery of high-purity cobalt, lithium, nickel and other base metals from lithium batteries typically used in the electric vehicles.

Details from the previously completed scoping study includes:

- Total capital cost: US$4.5 million;
- Life of plant: 10 years;
- Life of plant revenue: US$233 million;
- Average net operation cost: US$4.45 per pound cobalt or US$9,852 per tonne;
- Pre-tax cash flow: US$144 million;
- Pre-tax net present value: US$84 million; and
- Payback period: <1 year.


Commercialisation timeline

Neometals’ commercialisation plan is as follows:

- Pilot plant construction (May-July 2017);
- Commercial plant engineering cost study (July-December 2017);
- Commercial plant design and procurement (January-March 2018); and
- Commercial plant fabrication and construction (March-October 2018).

Phases after the pilot plant construction are subject to board approval and other requirements.


Analysis


The decision to build a pilot plant in Montreal marks an important step for Neometals as it progresses its strategy to diversify into the downstream lithium battery material supply chain.

The results from the previous test work and study gives Neometals leverage to a new commodity in cobalt, which is experiencing favourable supply-demand market dynamics.

The cobalt supply chain is under some stress due to the rapid increase in demand from battery manufacturing and a supply chain that is dominated by co‐production and high sovereign risk resource locations.

Currently less than 5% of used lithium‐ion batteries are recycled as disposal is typically either paid‐for recycling or landfill.

Given the current prices of cobalt and the outlook for future supply being outweighed by demand, Neometals has the opportunity to cash in on this favourable cobalt market.

Quick facts: Neometals Ltd

Price: 0.36 AUD

ASX:NMT
Market: ASX
Market Cap: $196.33 m
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