Cobalt mine holds promise, challenges for Idaho

A plan to build North America’s only cobalt mine could bring significant new investment and more than two dozen jobs to the Silver Valley.

Eventually, say Formation Capital Corp. executives, they hope metal from the Idaho Cobalt Project in Lemhi County will become the foundation for other Idaho-based industry that would make alloys and even finished products. Cobalt is used in batteries, jet turbines, even radial tires. It’s also an important catalyst.

The United States consumes 40 percent of the world’s cobalt, all of it imported. Idaho Cobalt Project output would meet about 15 percent of demand from North American countries if the mine and mill complex 40 miles from Salmon survives an environmental review and secures $50 million in financing. Of that amount, $11 million would be used to install cobalt-refining equipment at the Big Creek Hydrometallurgical Complex, which includes the Sunshine Precious Metals Refinery. Formation purchased the facility in 2002.

The refinery, closed when the Sunshine Mine was shut down, reopened in 2004 but has operated at less than full capacity. Besides precious metals, the plant can refine copper, which will be a byproduct of the Cobalt Project.

The expanded refinery would employ 39, up from 15 today. One truck would deposit 32 tons of concentrate at the facility each week. The mine and mill would employ 157.

Chairman and Chief Executive Officer Mari-Ann Green says the environmental review process, which will include a public comment period expected to start in January, might be complete this spring. If so, construction could start by the end of 2006.

If Formation reaches that milestone, it will be no small achievement.

Small, so-called “junior” mining companies usually identify an ore body, or bring a project up to the development stage, then let an established mining company taken over. Green says cobalt mining is so unique — Morocco has the world’s only other cobalt project — that major mining companies are not sure how it would fit in with what they already do. Most cobalt is produced as a byproduct of nickel or copper mining.

“We’ve been building this project as if we were the developers, as if we were going to go ahead ourselves,” Green says. It may be Formation’s first mine, she adds, but the executives and staff have decades of experience with other projects.

Volatile cobalt prices in recent years — as low as $8 per pound and as high as $28 — have also been a hurdle. A recent study projects prices ranging from $13 to $20 per pound five years out. The Idaho mine would produce a pound somewhere in the middle of that range.

Then there are the inevitable environmental concerns, heightened in Lemhi County by the damage done by the now-abandoned Blackbird Mine adjacent to Formation’s claims. Runoff from the Blackbird wiped out salmon and steelhead moving up Panther Creek from the Salmon River. It has cost Noranda Minerals, which never mined an ounce of metal from the mine, $60 million to reclaim the property. Fish are back.

Formation President W.G. “Bill” Scales says the Idaho Cobalt Project will not discharge any water into nearby streams. All water from the mill and underground mine, as well as any runoff, will be captured in a reservoir and processed. The water will then be sprinkled in the adjacent forest, which was ravaged by the 2000 Clear Creek fire.

“We’re hoping our land application process will be a net environmental positive,” Green says.

Scales says sophisticated computer modeling will allow operators to track water flow throughout the mine and mill.

The head of the Hailey-based Western Watersheds Project will take some convincing.

Jon Marvel says mining companies in the past have too often promised more in the way of environmental mitigation than they have delivered. He doesn’t want to see a repeat of Panther Creek.

Marvel’s awaiting a draft environmental impact statement for the project due out by the end of the year.

“We want to see how they’re going to do it,” Marvel says. “Trust but verify is my rule.”

Green says Formation wants to get it right. “It’s important to us to get the respect of all stakeholders,” she says.

Plans now call for a 10-year mine life, but Scales says reserves may allow Formation to work the extensive Idaho Cobalt Belt for many years into the future. Formation already owns the undeveloped Black Pine Project about halfway between the Cobalt Project and Salmon. No major mining companies have claims in the area, Scales says.

If it all comes together, Formation could have quite a future in Lemhi and Shoshone counties. The many Spokane companies that know something about metallurgy could ultimately be beneficiaries as well. All three counties know how persistent the effects of poor mining practices can be.

Let Green be green.