Common Mistakes in Cobalt Mining Feasibility Studies (and How to Avoid Them)

Cobalt seldom arrives alone. Outside a handful of primary arsenide deposits, it turns up as a companion metal: a by-product of copper in the Central African Copperbelt, a credit in nickel laterite projects, a minor phase in polymetallic orebodies. That single fact is where a lot of feasibility studies start to drift. The model looks tidy, the numbers hold together, and then an offtaker or a technical reviewer re-cuts the assumptions and the economics shift sharply.

The encouraging part is that the errors repeat. They are design problems rather than mysteries, and most can be caught before the study is signed off.

Treating cobalt as the headline when it is not

In a copper-cobalt operation, copper usually carries the revenue and cobalt swings the margin. In a laterite project, cobalt is often a modest credit against nickel. Both are perfectly good businesses. The trouble comes when the study is not explicit about how capital and operating costs are split between the two.

The classic version of this mistake runs like this: all the mining cost is loaded onto the primary metal, and cobalt is then presented at a wonderfully low all-in cost that no buyer believes. The mirror-image error is nearly as common — cobalt is lumbered with a share of cost the primary metal should carry, and a viable credit looks worthless.

Fix it early and in writing. State the allocation method, define contained versus payable metal, and show the study on both a by-product and a co-product basis. Say plainly which basis drives the investment decision. Reviewers will rebuild the economics their own way regardless; better that they start from your stated basis than from a guess.

Price assumptions borrowed from a good year

Cobalt has a habit of spiking hard and then sitting flat for a long time. A study anchored to a strong market does not survive its own sensitivity table.

Use a long-term price deck, then add a low case and a high case, and test the project at half your base case. Then test something less obvious: does it still work if cobalt holds flat while capital costs rise by a fifth? Many projects pass the first test and fail the second.

Demand-side assumptions deserve the same treatment. Cobalt consumption depends heavily on battery chemistry, and battery chemistry moves — different cathode formulations, alternative chemistries and recycling all shift the dial over a mine's life. Treat those as scenario settings rather than forecasts, and make clear which ones would change your mind.

Recoveries copied from a neighbouring deposit

Cobalt is not one mineral. Heterogenite, carrollite, cobaltite, erythrite, cobalt locked in pyrite or in manganese oxides — each behaves differently through flotation, leaching and smelting. Recovery figures borrowed from a deposit that looks similar on a map are one of the most expensive shortcuts available.

A testwork programme worth the money usually includes:

Mineralogical characterisation of cobalt deportment by mineral species, not just head grade.
Locked-cycle tests that demonstrate steady-state recovery and concentrate quality, rather than batch results.
Variability samples across the orebody — oxide, transitional and sulphide zones, plus the weathered margins that always get mined first.
Deleterious element checks: arsenic, uranium, fluorine, magnesium, talc and clay content all change the flowsheet.
Reagent consumption and thickening behaviour measured on your ore, not assumed from a design manual.

If a study reaches feasibility without this work, the recovery figure is an assumption wearing a lab coat.

The quiet costs: reagents, power and distance

Sulphuric acid, lime, flotation reagents, reductants, grinding media. In remote locations the delivered cost of these is often dominated by freight rather than the chemical itself, and a generic price list will understate it.

Ask for written quotes delivered to site. Check whether reagents arrive bulk or bagged, because handling, storage and labour differ. Model power on a real tariff structure with a realistic availability figure, and price the self-generation option if grid supply is thin. Water is the same story: source, licence, pumping distance, recycling and the cost of tailings neutralisation belong in operating cost, not in a contingency line.

Then look outward. Does the project depend on a haul road, a port, a border crossing or a transmission line that somebody else controls? Build that dependency into the schedule and the cost base, and name who owns the risk.

Offtake payables: concentrate is not metal

Most cobalt in concentrate moves through a small number of smelting and refining routes, and what the buyer pays reflects what they can recover from your material — not what you shipped. Multiplying grade by tonnes by price is not a revenue model.

Watch for these:

Payability for cobalt in concentrate is typically lower than for refined metal, and varies with the buyer's route.
Treatment and refining charges, moisture, and penalties for arsenic, magnesium or other deleterious elements.
Freight, insurance and the working capital tied up in transit, assay and final settlement.
Qualification timelines if you intend to sell a battery-grade product rather than an intermediate.

Where possible, model revenue from an actual term sheet rather than a textbook formula. If no offtake exists yet, say so clearly and run the model on stated assumptions. A lender will want to know how much of the revenue line rests on a contract and how much on hope.