Cobalt Blue Holding’s move from mining explorer to a project developer has been bolstered by the introduction of new United States (US) legislation, alongside the booming global electric car market.
Joel Crane and Joe Kaderavek from Cobalt Blue held a webinar for investors this week to examine the market impacts of the US Inflation Reduction Act 2022 and what the new legislation means for critical mineral companies.
William Roberts from Rho Motion, a company that provides analysis of the electric vehicle and battery markets, provided insights into how the new legislation will impact electric vehicle markets and their supply chains.
“The speed at which the Inflation Reduction Act 2022 was passed in the US surprised the sector,” Mr Roberts said.
This new piece of legislation is good news for Cobalt Blue as the company positions itself to become an ethical provider of affordable battery-grade cobalt.
US Senator Joe Manchin initially resisted President Biden’s proposed Build Back Better legislation which offered tax credits as an incentive to move the US toward electric vehicle ownership.
President Biden wanted electric vehicles to make up half of all cars in the US by 2030.
Senator Manchin argued that the legislation in its original form was lacking in its plans for electric vehicles and charging stations because it would create a dependence on the Chinese supply of batteries and associated materials.
He wanted to see North America get this industry up and running and be self-sufficient.
To do this, he wanted the legislation to recognise the need to secure responsible, reliable and ethical sourcing of critical rare earth minerals such as cobalt, nickel, lithium and graphite.
“From the technologies needed to support military readiness, combat climate change, to the cell phones in our pockets or the cars in our driveways, critical minerals are essential to the life we lead and the technologies we have come to depend on,” the Senator said.
The reworked legislation resulted in the Inflation Reduction Act.
This legislation restricts manufacturers’ suggested retail prices and puts rules around the origins of battery components and critical materials.
Under the new legislation, electric vehicles are only eligible for tax credits if assembly occurs within North America and no critical minerals are sourced from a ‘foreign entity of concern’.
In other words, critical minerals for electric vehicles manufactured in North America must be extracted, processed or recycled in the US or a country with a free trade agreement with the US, which includes Australia.
Australia has taken a further step to secure a supply chain partnership with the US by entering into the Minerals Security Partnership (MSP).
The mining sector is now waiting for guidance from the US Treasury Department, which is charged with creating a system for tracking the minerals and components going into electric vehicles.
The US is looking for supply chains that meet the highest environmental, social and governance standards, which will benefit Cobalt Blue.
Joel Crane, Commercial Manager at Cobalt Blue Holdings, explained that a divided market is likely to emerge with a premium market evolving due to different classes of cobalt, those from ethical suppliers as separate from non-green suppliers of cobalt.
“There will be a race to incentivise that market,” he said.
Should Cobalt Blue move into full mining production, the company is clearly well placed to meet some of the US demand for battery-grade cobalt. For now, however, it is a matter of watching this space.
Cobalt Blue Holdings recently published its 2022 Annual Report, which is available on its website at: https://cobaltblueholdings.com/news/