Offtake Agreements

On the back of BMW's huge $112m cobalt supply contract with Morocco's Managem Group & the recent Tesla/Glencore cobalt deal, I thought that it was time for a new thread.

Future cobalt supply security is clearly on the minds of OEMs & battery supply chain players. This is reflected in the number of offtake agreements that have been dropping. Here are a few:

Tesla & Glencore
BMW & Glencore
BMW & Managem Group
SK Innovation & Glencore
Umicore & Glencore
Samsung & Glencore
GEM & Glencore

It was reported last year (in The Japan Times) that Toyota, Honda & Panasonic were considering a JV to procure cobalt.

And in the last JRV Quarterly Activities Report (14 April 2020), the company provided the following update:

"ICO off-take negotiations have been impacted by Covid-19, particularly in Japan and South Korea where travel has been restricted to date in 2020. Jervois continues to prepare and dispatch physical concentrate samples to additional markets and is engaging with customers remotely".

You don't have to be a rocket scientist to put two and two together here.

For the newbies, offtake agreements are legally binding contracts for future supply. They help reduce risk in terms of finance discussions. I'm usually not all that excited by them, however, the size of the BMW & Managem deal made me sit up and think. If JRV can pull off a decent size offtake with the Japanese and/or Koreans, it really puts us in the box seat in terms of debt financing the ICO mine build. And if JRV can 100% debt finance the ICO or even debt with minimal equity/dilution in the current market, it's fasten your seatbelts, Dorothy, time.

Come on, Bryce!!! You can do it!!!