Cobalt Crisis: Jervois Global Ltd Forced to Reorganize Amid Plummeting Prices
The electric vehicle (EV) revolution has hit a speed bump, and it’s not just about range anxiety. A key ingredient in EV batteries, cobalt, has seen its price plummet by a staggering 72% since April 2022, forcing fledgling producer Jervois Global Ltd to delist and reorganize.
A Glut in Cobalt Supply
The main culprit behind this crisis is China, which dominates the cobalt production market. Despite sluggish EV sales, Chinese producers continue to pump out cobalt, creating a supply glut. This oversupply has led to a sharp decline in cobalt prices, making it difficult for smaller players like Jervois to stay afloat.
The Fall of Jervois
Jervois, which had ambitious plans to become the only primary cobalt mine in the US, has been struggling to compete with Chinese rivals. The company suspended final construction of its Idaho mine last year due to weak prices. Now, it’s being forced to go private in a recapitalization deal with US fund manager Millstreet Capital Management. The deal will wipe out hundreds of millions of dollars of shareholders’ investments.
The Impact on Shareholders
AustralianSuper, Australia’s largest pension fund, and commodity trader Mercuria are Jervois’ top two shareholders, holding stakes of 23% and 7.6%, respectively. AustralianSuper’s holding in Jervois almost tripled between June 2022 and June 2024, but the value of that shareholding fell to A$6 million from A$170 million over the same period.
A Glimmer of Hope
Despite the setback, Jervois will continue to operate as normal during the recapitalization process, including at its cobalt refinery in Finland and a nickel refinery in Brazil. However, its US cobalt mine is likely to remain mothballed until prices for the metal hit at least $20 per pound, roughly double current levels.
A Call to Action
The crisis highlights the need for strategic support for US mining companies facing Chinese competition. As the industry navigates this challenging landscape, it’s essential to find ways to level the playing field and ensure a sustainable future for EV production.
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