Cobalt Blue Holdings Soars 133% After Signing Strategic Partnership with Legacy Minerals

Cobalt Blue Holdings (ASX: COB) stunned the market this morning, soaring 133 percent after Legacy Minerals announced a new three-year partnership that could reshape Australia’s cobalt supply chain. The two companies signed a Memorandum of Understanding to explore ways to process and sell cobalt and other by-products from Legacy’s NiCo Young Project in New South Wales, using Cobalt Blue’s existing Broken Hill Project and its advanced Kwinana Refinery.

The refinery, which aims to produce 3,380 tonnes of cobalt metal per year by 2027, could be the missing link in developing a fully domestic, battery-grade cobalt supply network an area of growing strategic interest as global demand for electric vehicle materials accelerates. NiCo Young already ranks among the top four nickel-cobalt deposits in New South Wales, positioning it as a valuable piece in Australia’s push to build local capacity for critical minerals.

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Legacy Minerals Partnership Could Solve Key Supply Gap for Cobalt Blue’s Kwinana Refinery

The new partnership between Legacy Minerals and Cobalt Blue is strategically significant, as it could help address a key supply challenge for Cobalt Blue’s upcoming Kwinana Refinery in Western Australia. The refinery, expected to commence production in 2027, is designed to produce around 5,000 tonnes per year of battery-grade cobalt sulphate, a critical material used in electric vehicle batteries.

To achieve this, Kwinana will require approximately 12,000 tonnes of raw feedstock annually. However, Cobalt Blue’s primary source, the Broken Hill Project, is expected to supply only around 4,000 tonnes in the early stages, leaving a notable shortfall. Legacy Minerals’ NiCo Young Project could play a pivotal role in filling this gap.

The NiCo Young deposit hosts an estimated 97,000 tonnes of cobalt in the ground, representing roughly USD 4 to 5 billion in value at current market prices, assuming recoveries of 60 to 70 percent. Its location in New South Wales also offers a logistical advantage, potentially reducing transport costs by 30 to 40 percent compared to imported material. Together, these factors position the partnership as a potential win-win, supporting both companies’ ambitions within Australia’s growing critical minerals sector.

The Beauty and the Beast – Risks to Keep an Eye On

While the partnership appears promising, investors should be mindful of several key risks. The agreement remains non-binding, meaning there is no guarantee it will proceed. If metal recovery rates from Legacy Minerals’ NiCo Young Project fall below 60 percent, it could delay the supply of feedstock to Cobalt Blue’s Kwinana Refinery and impact its production schedule.

Cobalt Blue’s Broken Hill Cobalt Project (BHCP) also faces potential headwinds. Environmental approvals are not expected until 2026, and construction costs have already risen by around 15 percent since 2023 to approximately AUD 250 million. Further cost increases could place upward pressure on debt levels once development begins.

From a commodity perspective, cobalt prices have fallen about 10 percent in recent months due to oversupply from the Democratic Republic of Congo. Should prices continue to weaken, the overall project value could decline, highlighting the importance of stable pricing and disciplined execution as the partnership advances.