Cobalt miner Jervois in rescue deal after struggle to compete with China

Jervois Global

02/01/2025 13:00

By Eric Onstad
       LONDON, Jan 2 (Reuters) - A collapse in the price of
battery metal cobalt has forced fledging producer Jervois Global
Ltd  JRV.AX  to delist and reorganise, the firm said on
Thursday, after struggling for  years to compete with Chinese
rivals.
    The move highlights a glut in cobalt, a key ingredient in
electric vehicle batteries, as dominant Chinese producers
continue to pump out the material while EV sales have failed to
meet bullish forecasts. 
    The price of cobalt  OCBc1 , which is also used in 
electronics and a range of weapons, among other goods, has
tumbled 72% since hitting a peak in April 2022. 
    The price of another Jervois product, nickel  CMNI3 , has
fallen by more than half over the past two years.     
    Jervois, which last year suspended final construction of
what would be the only U.S. primary cobalt mine due to weak
prices, will go private in a recapitalisation deal with U.S.
fund manager Millstreet Capital Management.
    Millstreet was a key lender to the company and will inject a
further $145 million while Jervois will transfer its assets to a
nominee of Millstreet, a statement said.
    The deal will wipe out hundreds of millions of dollars of
shareholders' investments. Its top two shareholders are
Australia's largest pension fund and commodity trader Mercuria
with stakes of 23% and 7.6%, LSEG data showed.
    AustralianSuper's holding in Jervois almost tripled to
roughly 400 million shares between June 2022 and June 2024,
according to holdings data for its largest fund. Over the same
period, the value of that shareholding fell to A$6 million from
A$170 million. 
    AustralianSuper and Mercuria both declined to comment.
    Jervois will continue to operate as normal during the
recapitalisation process, which is expected to be completed
before the end of April, including at its cobalt refinery in
Finland and a nickel refinery in Brazil. 
    Jervois' U.S. cobalt mine is likely to remain mothballed
until prices for the metal hit at least $20 per pound, roughly
double current levels, a senior executive told Reuters last
month.
    The executive also said U.S. President-elect Donald Trump
should deploy tariffs strategically rather than bluntly as he
aims to support U.S. mining companies facing Chinese
competition.
    Jervois said last year that it had received $15 million from
the U.S. Department of Defense, which was funding all of its
drilling efforts at its Idaho cobalt mine.
          

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Cobalt prices tumble as mine supply ramps up    https://tmsnrt.rs/3W4RFxT
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 (Additional reporting by Clara Denina in London and Lewis
Jackson in Beijing; editing by Jason Neely)
 ((eric.onstad@thomsonreuters.com; +44 20 7542 7093; Twitter https://twitter.com/reutersEricO;
 Reuters Messaging: eric.onstad.thomsonreuters.com@reuters.net))