Cobalt, alongside lithium, is a key component in battery packs for electric vehicles and is in scarce supply.
Initially, royalty specialist Anglo will pay Brazilian Nickel Limited (BRN) US$2mln for a 1% gross revenue royalty (GRR) on the Piauí nickel – cobalt project in the north-east of the country.
Anglo-Pacific also has an option to spend up to an additional US$70mln to increase the gross royalty on Piaui by up to a further 4.5 percentage points dependent on when it is exercised and how the project has developed.
Julian Treger, Anglo Pacific’s chief executive, said: "The Piauí royalty reflects the company's strategy of investing into earlier stage, high growth potential royalties.
“Combined with our Maracás Menchen vanadium royalty, this investment also represents a continuing strategic pivot into metals which are exposed to the burgeoning electric vehicle story.”
BRN will use the initial funding for a pilot plant with nameplate annual production capacity of 1,000 tonnes of saleable nickel, which, if successful, will be followed by a full plant producing 24,000t of nickel each year and 1,000t of cobalt.
The project is close to water, power and transport and BRN currently estimates it can produce nickel at below US$3 per pound. The nickel spot price currently US$5.08 per lb.
Shares rose 1% to 137.4p.
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