Idaho’s Only Cobalt Mine Sits Idle Amid Low Prices and Chinese Competition

In the northern Idaho woods, the only U.S. cobalt mine remains inactive as its owner, Jervois Global, struggles with low cobalt prices caused by an influx of cheaper supplies from Chinese producers. The mine, set into a nearly 8,000-foot mountain, was idled in June 2023 just weeks before its planned opening, leading to over 250 job losses. A skeleton crew now maintains the equipment to prevent damage.

Jervois Global's site manager, Matthew Lengerich, explained that the decision to halt operations was due to cobalt prices falling to $12.17 per pound in July, far below the $20 per pound needed to justify opening the mine. This price drop followed the commencement of production at China's CMOC Group's Kisanfu mine in the Democratic Republic of Congo, which drove global cobalt production to record levels.

Western mining companies, including Jervois and Albemarle, face similar challenges, struggling to compete with Chinese-linked firms that benefit from lower production costs, often linked to less stringent environmental and labor standards. This competitive disadvantage has led to calls for a two-tier pricing system, which would see sustainably produced metals sold at a premium.

This proposed system aims to differentiate prices based on production methods, such as a higher price for "green" nickel versus standard nickel. However, implementing such a system could complicate market transparency and lead to varied definitions of what constitutes a "green metal."

Efforts to establish two-tier pricing are gaining traction among policymakers and industry leaders, especially as Western governments express concern over Chinese dominance in critical minerals. Measures such as tariffs, supply chain transparency requirements, or government insurance for mines are being considered to support Western miners until the pricing system is widely adopted.

In the meantime, companies like BHP and Albemarle have had to adjust operations. BHP suspended its Australian nickel mines due to economic challenges, and Albemarle laid off staff in January amid low prices driven by increased Chinese production.

To combat these challenges, world leaders have taken steps to counteract China's market control. U.S. President Joe Biden imposed tariffs on Chinese critical minerals, and Canadian and Australian officials have called for differentiated trading markets based on ESG standards.

Automakers are cautiously navigating this evolving landscape, balancing the need for sustainably produced minerals with competitive pricing pressures. General Motors, Volkswagen, BMW, and Stellantis have all emphasized the importance of high standards from their suppliers but remain wary of the cost implications.

Exchanges like the London Metal Exchange and Benchmark Mineral Intelligence are beginning to implement pricing for sustainable metals, reflecting industry-wide efforts to encourage higher production standards. Despite these initiatives, the challenge of ensuring a non-China supply of critical metals persists unless there is a willingness to pay a premium for sustainable products.