All the more reason for a major to get in under the wire (sort of speak) . To see how some of these majors like to operate just look at Formation Capitol recieved permision to mine the Idaho Cobalt project and Xstrata trying to keep Formation from using their property as a road way.

Very interesting read showing how ruthless these majors are .I am sure our management knows how to deal with these majors .

Formation Capital Gets Ever Closer To Production At The Idaho Cobalt Project, In Spite Of The Actions Of Xstrata

By Charles Wyatt. 22/7/09

Mick Davis asserted during his after-dinner speech to the Melbourne Mining Club at Lords Cricket Ground that Xstrata gives maximum autonomy to its operations around the world. But there is a danger that this can prove to be a two-edged weapon. Back in 2002 Xstrata closed the Windimurra vanadium mine in Western Australia where it was in a joint venture with Precious Metals Australia. Bad enough to have to close a mine with all the redundancies that implies, but the major also started to dismantle the plant without the agreement of its partner. Roderick Smith, who was running Precious Metals at the time, fought back through the courts and managed to stop Xstrata from removing the kiln and a lot of other equipment. He also came away with a cheque for A$24 million.

That equipment, worth several hundred million dollars, was key to subsequent attempts to resuscitate the mine, which got underway in 2008. It is impossible to know if Xstrata’s head office was asked if the plant should be dismantled, or whether the decision was taken independently at a local level. But dismantling the plant would hardly be disadvantageous to Xstrata, given that it also produces vanadium in South Africa, and product from that operation would be more likely to fetch a higher price if Windimurra vanadium was unlikely to hit the market any time soon. It’s perhaps more likely that the local management made its own decision, but Mick Davis would certainly have known about it when he had to sign a cheque for A$24 million. Autonomy is a great thing, but local managers still have to be kept on a strong leash. And fast forward to 2009, and a similar thing seems to be happening in Idaho, only this time round the bill could be even higher if it can be proved that the local management is in breach of anti-trust law.

Anti-trust law in the States is pretty lethal. It was created to prevent monopolies and break up giant corporations like Standard Oil. The philosophy behind the laws is that trusts and monopolies can cause markets to stagnate by preventing others from engaging in healthy market competition. The fines can be mind-boggling, so it is difficult to understand why Xstrata US is tempting fate by trying to prevent the Canadian-listed company Formation Capital getting access to its Idaho cobalt project, other than to say that the Idaho project will be the first primary producer of the metal in the States. Xstrata is the minority partner in the old Blackbird minesite, which lies close to the Idaho cobalt project, and which is undergoing restoration and through which Formation Capital needs access. In January of this year the US Department of Agriculture, US Forest Service handed down a Record Of Decision which meant that the cobalt project could go ahead. But appeal against that decision was lodged three months later by Xstrata, despite the fact that Rio Tinto, the majority partner in Blackbird, decided not to join in.

Such an action seems mighty strange, until one remembers that Xstrata owns the Nikkelverk refinery at Kristiansand in Norway which has the capacity to process 86,000 tonnes of nickel, 39,000 tonnes of copper cathodes and 5,200 tonnes of cobalt annually. Most of that cobalt is sold to the US where it is considered to be a strategic material. The view is that cobalt is a commodity whose lack of availability during a national emergency would seriously affect the economic, industrial, and defensive capability of the US. Until the Idaho cobalt project comes into production the US will be importing virtually all its cobalt requirements, and a goodly slice of that is coming from Nikkelverk. When the Idaho cobalt project gets into production it should be producing 1,525 tonnes per year of super-alloy grade high purity cobalt metal for a minimum mine life of ten years.

Not hard to see why somebody somewhere might think they were doing a big favour for Mick Davis, sitting safe and sound back in Zug in Switzerland, by holding up development at the Idaho project as long as possible. The anticipated level of production at Idaho is equal to 3.3 per cent of the entire global cobalt supply and it will be able to meet no less than 15 per cent of the North American demand for cobalt. As the Idaho project would be on home territory it does not require a brain surgeon to deduce that those 1,525 tonnes per year will be sold at home and US import requirements will fall by that amount. Should be plenty to go round, one might think, as the US only consumes 20 per cent of world production, but that may not be how it appears to someone somewhere along the chain of command who’s trying to make an impression in Zug.

This hold up is yet another frustration for Mari-Ann Green, chief executive of Formation Capital, and she has encountered plenty of these in her efforts to bring the cobalt mine into production. How ironic then that it is another mining company that is chuntering on about environmental impact rather than the usual band of tree huggers. They have actually been won over by Mari-Ann who has gone out of her way to counter every objection by explaining exactly what the project involves. Her policy of meeting every problem head-on has taken the Idaho cobalt project to the point where funding is the next big hurdle to be crossed. According to Mari-Ann, plenty of interest is being shown by financiers and talks are in progress about a number of funding methods, including partnerships and off-take agreements, debt and equity. The aim is still to start construction this autumn and it will take a year after that before production is ready to start. Women usually get what they want in the end, so Mick Davis’s minions would be best advised to step aside.