As the lithium-ion battery market grows, cobalt demand is surging, driving renewed interest in long-dormant mines and showcasing the potential for huge financial windfalls.
It takes a thick pair of rose-colored glasses to see an EPA-designated superfund site like Fredericktown, Missouri’s Madison Mines as a financial asset. Closed in the 1970s and designated in 2003, the site has lain dormant for over four decades, unutilized and absorbing federal tax dollars.
But its huge cobalt reserves, outside investment, and favorable market forces are combining to bring renewed life to the 1,800 acre site, which could start producing cobalt in as little as six months. For the first time in a long time, Madison Mines won’t be collecting dust anymore — it’ll be producing one of the hottest commodities around.
Surging Demand
The rapid growth of the electric vehicle (EV) and mobile device markets has driven a corresponding rise in the production of lithium-ion batteries, which invariably use cobalt.
Global EV sales have risen sharply, from just 45,000 global shipments at the beginning of the decade to a record 1.1 million in 2017. As Tesla ramps up production of its Model 3 and other major auto manufacturers continue to put skin in the EV game, projections are indeed rosy — with over 10 million EV sales expected for the year 2025.
Responsible for 50% of all demand for cobalt, the $31 billion lithium-ion industry, which didn’t even exist 30 years ago, is projected to grow at a 13% annual rate over the next five years.
When it comes to li-ion technology, cobalt is a crucial component. Experts say battery production is “more likely to be constrained by cobalt” than by lithium, and with demand far outstripping supply, the markets are responding: Cobalt prices have risen over 200% in just the last two years.
A domestic source of cobalt would likely draw particular interest from American tech giants such as Apple and Tesla.
A (Proverbial) Gold Mine
The 1,800 acres that locals call Madison Mines is home to the largest deposit of cobalt in the United States. The site is estimated to contain over 15,000 tons of the mineral — worth roughly $1.4 billion in today’s prices. So why the wait?
In short, cobalt hasn’t always been in such high demand. Prior to the site’s closure, lead was considered the only commodity worth mining, while cobalt was seen as nothing more than a nuisance to be discarded with the tailings. When U.S. lead production began declining steadily, the mines became financially unviable and were abandoned.
A Renaissance of Sorts
In April, St. Louis-based Environmental Operations Inc. purchased Madison Mines from Anschutz Mining Corp. with plans to remediate and reopen the site. The mine could be producing cobalt in as little as six months — and keep producing for the next 12 to 15 years. The project is expected to create between 275 and 300 new full-time jobs, with an additional 300 to 400 temporary jobs created for construction purposes.
With demand for cobalt expected to rise steadily in the coming years as li-ion battery production expands, Environmental Operations CEO Stacy W. Hastie is hoping to serve some of that demand with a “reliable and stable supply” of the hot-ticket mineral. And it could be a boon for Missouri’s economy.
A Trusted Partner
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