Ego Resources churning out cobalt at Ontario plant

A cobalt recovery plant operated by Ego Resources (TSE) is now in business, employing 50 people and producing 300 to 500 lb. of the metal per day.

Situated in Cobalt, Ont., the $14-million hydrometallurgical facility was designed to produce cobalt for refining into compounds using a proprietary recovery process consisting of crushing, grinding, flotation, pressure digestion, solvent extraction and compound precipitation.

Unlike most other Canadian cobalt producers, Ego is producing cobalt salts (which can be sold at a premium), such as cobalt chloride and cobalt carbonate, rather than just the pure metal. The extraction process employed, which was developed by Ego subsidiary Cobatec, enables the company to recover cobalt from feedstocks — a procedure that had not been economically or environmentally feasible in the past.

Ego has announced that German manufacturer H.C. Starck (part of the Bayer group) plans to buy cobalt from Ego for use in rechargeable batteries However, Ego Vice-President Brian Schneidman says no sales of cobalt compounds will be made until Ego considers its product to be”high quality”, which he expects to be “very shortly”.

Nevertheless, he says the extraction process is working well and mechanical problems of concern early on have been ironed out. Production should become profitable by September, he added.

The startup rate of 300 to 500 lb. per day will rise to 1,600 lb. when the plant reaches capacity, within four or five months. Ego spokesman David Lakoff says the cost per pound of production from the plant is being kept confidential “for marketing reasons.”

“With the startup of our facility, Ego Resources is poised to become the world’s only company dedicated to the primary production of cobalt,” says Ego President Edward Wenger. He adds that because Ego produces only cobalt, it is insulated from changes in demand for other minerals, whereas secondary cobalt producers are not.

“With [Ego’s] new technology, it could be very profitable,” says Louis Perron of Natural Resources Canada’s mining sector.

Ego’s operations will not have much impact on the volatile cobalt market because plant production will only amount to 1-2% of world production, he explains.

Nevertheless, Perron predicts a seller’s market for Ego’s cobalt as a result of lower prices for the primary metals along with which the cobalt is mined, and also as a result of political problems in the leading producer countries of Zaire and Zambia.

The major use of cobalt is in the superalloys of jet-engine turbine blades and gas turbines for pipeline compressors, where it improves the strength, wear and corrosion-resistance characteristics of alloys at high temperatures. It is also an important component of tools, permanent magnets, paint, glass and ceramics.

In other news, Ego announced the private sale (subject to regulatory approval) of 2 million units for an aggregate purchase price of $4 million. Each unit consists of one common share of Ego at $2 per share and one common share purchase warrant.