Jervois Turns to Rescue Deal to Survive Cobalt Price Plunge

Jervois Global (TSXV: JRV) announced a major restructuring plan on Thursday, including delisting and privatization, following years of difficulty competing with dominant Chinese cobalt producers. The move was driven by a dramatic collapse in cobalt prices and sustained market oversupply.

Once heralded as a linchpin of the green energy transition, cobalt—a critical component in EV batteries, electronics, and other technologies—has seen its market value plummet. Prices have dropped 72% since peaking in April 2022, reflecting a significant mismatch between supply and demand.

Dominated by Chinese producers who account for the majority of global output, the cobalt market remains oversaturated, with Chinese companies continuing to flood the market despite faltering EV sales.

Jervois attributed some of its difficulties to this landscape, describing how the company has been “struggling for years to compete with Chinese rivals.”

Adding to the pressure, nickel—another key product for Jervois—has also seen prices drop by more than 50% over the past two years, further complicating the company’s financial outlook.

Founded as a promising alternative to Chinese dominance, Jervois made headlines by advancing plans for the only primary cobalt mine in the United States. However, those ambitions were stymied last year when the company halted construction on the mine in Idaho, citing weak cobalt prices.

The financial blow to shareholders has been immense. Jervois’ largest investors—Australia’s biggest pension fund, AustralianSuper, and commodity trader Mercuria—have seen their investments nearly wiped out.

Between June 2022 and June 2024, AustralianSuper’s holdings in Jervois surged to around 400 million shares, only for the value of that stake to plunge from A$170 million to a mere A$6 million. Neither AustralianSuper nor Mercuria has commented on the financial fallout.

In a last-ditch effort to salvage its operations, Jervois has struck a deal with U.S. fund manager Millstreet Capital Management, its principal creditor. The agreement includes a $145 million injection from Millstreet and the transfer of Jervois’ assets to a Millstreet nominee.

This restructuring, expected to be finalized by April, will effectively wipe out existing shareholders but ensure the company’s continued operation, including its Finnish cobalt refinery and Brazilian nickel refinery.

Jervois emphasized in a statement, “Jervois will continue to operate as normal during the recapitalization process, ensuring the stability of its global operations.”

The challenges facing Jervois are emblematic of broader issues confronting Western mining companies, particularly in the face of fierce Chinese competition. A senior Jervois executive previously noted that the company’s U.S. cobalt mine in Idaho would remain mothballed until cobalt prices rise to “at least $20 per pound, roughly double current levels.”

The executive also expressed a need for strategic policy measures, stating that U.S. President-elect Donald Trump “should deploy tariffs strategically rather than bluntly as he aims to support U.S. mining companies facing Chinese competition.”

The U.S. Department of Defense had previously provided Jervois with $15 million to support exploration efforts at its Idaho cobalt mine.

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Information for this briefing was found via Reuters and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.