Cobalt miner Jervois Global (JRV.AX) announced on Thursday that it will enter a pre-packaged bankruptcy deal, with one of its lenders, Millstreet Capital Management, taking the company private. This move highlights the challenges faced by Western miners as competition from China escalates.
Key Highlights:
Details of the Rescue Deal:
Millstreet Capital will inject $145 million into Jervois and convert over $100 million in loans to equity.
The deal will result in the complete loss of existing shareholders, as Jervois has not turned a profit in seven years.
Background on Jervois:
The company idled its Idaho cobalt mine in 2023, leading to the layoff of 250 workers just weeks before its planned opening. This mine was the only U.S. source of cobalt, a crucial component for electric vehicle batteries and electronics.
Jervois CEO Bryce Crocker acknowledged the company’s struggles, stating, “We needed to restructure,” as the viability of the Idaho mine depends on cobalt prices rising to about double their current levels.
Market Pressures:
Jervois’s difficulties have intensified since China’s CMOC Group opened a mine in the Democratic Republic of Congo in 2023, increasing global cobalt production even as electric vehicle sales have not met expectations.
Cobalt prices have plummeted 72% since peaking in April 2022, severely impacting Jervois’s stock, which has seen a significant decline.
Financial Strategy:
Millstreet’s decision to convert debt into equity allows it to take full control of Jervois’s assets, which include a cobalt refinery in Finland and a nickel refinery in Brazil.
The company had previously engaged an investment bank to explore funding options after the Idaho site was halted.
Future Plans and Government Support:
A $15 million grant from the Pentagon will remain unaffected by the bankruptcy, continuing to fund a study on the potential construction of a cobalt refinery in the U.S.
Jervois plans to operate normally during the bankruptcy process, expected to conclude by the end of April.
Industry Outlook:
Jervois has urged U.S. policymakers, including President-elect Donald Trump, to avoid broad-based metals tariffs and instead incentivize manufacturers to source cobalt from Western miners.
Crocker emphasized the need for government intervention to “rebalance the playing field” in the cobalt market.