Jervois Global (ASX: JRV) (TSXV: JRV) has long been a favourite stock of ours and not in a positive manner. They spent near a decade - in an earlier incarnation of the company - playing around with the rare earth scandium, touting a plan that really was never going to work. They've since moved into cobalt with that Idaho cobalt mine - what would be the only primary cobalt mine in the US and given strategic concerns over critical minerals that should be worth something. As it turned out that cobalt mine wasn't, as Jervois said, worth mining. The global cobalt price just isn't sufficient to support the costs of primary mining: “Jervois suspended final construction at ICO in late March 2023 due to continuing low cobalt prices and U.S. inflationary impacts on construction costs, to prudently preserve the value of ICO's cobalt ore body.”
We hear gossip - and really, this is gossip, no more than that, industry participant calling to industry participant across the telephone lines and no more - that that's not quite the whole and complete explanation. The Idaho ore body contains arsenic and the processing circuits were not designed to deal with that. That is, there's a technical problem here, not just a price one. Clearly it's a solvable problem but possibly rather expensively, given the work already done.
Jervois Global share price from ASX
Today's announcement is that US DoD has handed over a grant to enable further study of that mine and processing plant. “The Agreement Funding will also fund a bankable feasibility study (a “BFS”) for a cobalt refinery in the U.S. to be completed by a Jervois subsidiary delegated by Jervois Mining USA” Well, that might solve that problem the gossip talks about. Given the technicalities here we're not wholly sure of that ourselves, it could be that the entire idea of how to process needs to be changed rather than just a few tweaks.
We also think that this doesn't change that price problem. For it is true that even if Jervois used price as the excuse prices still don't really support primary cobalt production. Simply because so much Co is produced as a byproduct of Ni and Cu mining. That means that plants will keep operating even when the all in Co mining costs are above revenues. Because you run the plant to gain the Ni and or Cu - the Co only has to cover its marginal, not all in, costs. This is an option simply not available to a primary producer.
It's just one of those things - being a primary producer of any metal in a market dominated by secondary - byproduct - producers is a very exposed place to be.
