Cobalt Blue Faces Supply Risks Despite Strong Refinery Economics
Cobalt Blue Holdings has significantly upgraded the economics of its Kwinana Cobalt Refinery project, driven by a sharp rebound in cobalt prices following market disruptions in the Democratic Republic of Congo. The company is advancing towards a Final Investment Decision with key permits and supply agreements in place.
- NPV rises from A$90m to A$155m, IRR jumps from 23% to 32%
- Initial production set at 3,000 tonnes cobalt, split between sulphate and alloy-grade metal
- Feedstock sourcing revised to cobalt hydroxide with potential battery recycling integration
- Key permits secured and binding feedstock agreement with Glencore signed
- Cobalt prices surged 90%–300% after DRC export restrictions reshape market
Market-Driven Recalibration
Cobalt Blue Holdings Limited has unveiled a substantial upgrade to the financial outlook of its Kwinana Cobalt Refinery (KCR) project, reflecting a transformed cobalt market landscape. The company’s reassessment of project parameters, including feedstock sourcing and product diversification, has propelled the net present value (NPV) from A$90 million to A$155 million and boosted the internal rate of return (IRR) from 23% to 32%. This recalibration underscores the impact of recent market dynamics, particularly the cobalt price surge triggered by policy changes in the Democratic Republic of Congo (DRC).
Strategic Product and Feedstock Adjustments
Originally planned to produce solely cobalt sulphate, the refinery’s output mix has been diversified to include approximately 2,000 tonnes of cobalt sulphate and 1,000 tonnes of alloy-grade cobalt metal annually. This shift responds to growing demand from industrial and defence sectors, especially in the United States, for high-purity cobalt metal. On the feedstock front, the project will initially rely on imported cobalt hydroxide, sourced under a binding agreement with Glencore from their DRC operations, while also exploring the integration of recycled battery black mass as a sustainable feedstock option.
Progress Towards Final Investment Decision
Significant milestones have been achieved in 2025, including securing a Works Approval permit from the Western Australian government and producing cobalt products that meet customer specifications. The company is now focused on finalising binding offtake agreements and assembling the project funding package, with detailed engineering expected to conclude in the first half of 2026. These steps are critical to advancing the project towards a Final Investment Decision (FID), which will set the stage for construction and operation.
Market Context, The DRC Export Ban Impact
The cobalt market has undergone a structural shift following the DRC’s temporary export ban in early 2025, aimed at curbing illegal mining and oversupply. This move, replaced later by a stringent export quota system, has halved the country’s cobalt export volumes, tightening global supply. Prices for cobalt hydroxide and sulphate have surged by over 240% and 300% respectively, while alloy-grade cobalt metal prices have also risen significantly. These price dynamics have materially improved the economic case for the Kwinana Refinery, which is positioned to supply both battery and industrial cobalt markets.
Looking Ahead
While the project’s capital and operating costs remain under review pending detailed engineering, the flexibility designed into the refinery allows it to adapt to evolving market conditions and feedstock availability. Cobalt Blue’s strategic positioning in Australia aims to reduce reliance on DRC supply chains and meet growing demand from sectors prioritising secure and diversified cobalt sources. The company’s progress and market tailwinds suggest the Kwinana Refinery could become a pivotal player in the global cobalt supply chain.
Bottom Line?
As cobalt markets tighten and prices climb, Cobalt Blue’s Kwinana Refinery stands poised to capitalize, but final investment hinges on securing offtake and funding.
Questions in the middle?
- Will Cobalt Blue secure binding offtake agreements to underpin project financing?
- How viable and scalable is the integration of recycled battery black mass as a feedstock?
- What impact will evolving DRC export policies have on long-term cobalt supply and pricing?
