Cobalt prices soar as China stockpiles metal used in smartphones, electric car batteries

Jevans Nyabiage, South China Morning Post

<div class='embed-wrap'><figure data-feedback='fb:likes,fb:comments'><img src='http://sa.kapamilya.com/absnews/abscbnnews/media/2021/business/03/15/cobalt.jpg' ><figcaption>The Democratic Republic of Congo produces about two-thirds of the world’s cobalt. Reuters</figcaption></figure></div>The price of cobalt, which is used in batteries for electric vehicles, as well as smartphones, tablets and laptops, has risen by about 65 per cent since January.A tonne of the metal sold for US$53,000 last week on the London Metal Exchange, its highest level since December 2018.The price rally started late last year when China’s State Reserve Bureau announced plans to stockpile cobalt because of a boom in sales of electric vehicles in China and Europe.One country that should be benefiting from the price rise is the Democratic Republic of Congo (DRC), which produces about two-thirds of the world’s cobalt, but supply shortages caused by logistical issues and fears of political instability in the Central African nation have hurt the industry. There are also concerns about the ethical sourcing of cobalt, including allegations of the use of child labour in mines.Gregory Miller, an analyst at Benchmark Mineral Intelligence in London, said the impact of the Covid-19 pandemic had slowed the movement of goods through the supply chain, including in the DRC.“Chinese companies continue to ship cobalt hydroxide to China from Africa, but there have been delays which have helped drive tightness in the market,” he said.Analysts at Benchmark Mineral Intelligence said the extent of the recent strong demand was reflected in China’s battery production figures, which rose by more than 300 per cent year on year in January.Miller said some major refiners in China had scaled back metal production in favour of cobalt chemicals “due to the strength of downstream demand from the battery industry and the healthy premium that existed for cobalt sulphate [refined cobalt product] over metal across February”.But he said these were not significant volumes and the reduction in metal production was not expected to have a significant impact on the market.With several metal producers in China, notably Huayou Cobalt and Yantai Cash, scaling back production to focus on chemicals, “the availability of cobalt metal is expected to tighten further over the coming weeks, driving further upwards pressure on prices”, Benchmark said in note to investors.George Heppel, a senior consultant at CRU Group in London, said the cobalt market was likely to be quite fragile over the next five years.“There should be sufficient material to keep battery makers and car companies well supplied, but it depends on the prompt start up of several mining projects in Indonesia and the DRC which carry various risks,” he said.While the DRC would continue to be the mainstay of the cobalt market because of its huge reserves, “we are seeing some modest diversification with more supply coming from assets in Indonesia in particular”, Heppel said.Chinese companies have invested heavily in the DRC. China Molybdenum, which owns the world’s second-largest cobalt mine – Tenke in the DRC – recently bought the Kisanfu resource from Freeport McMoRan for US$550 million. Other Chinese firms operating in the DRC include Huayou Cobalt, Chengtun Mining, Wanbao and CNMC.China is the world’s biggest importer of cobalt, buying about 95,000 tonnes of it every year. Global reserves of cobalt stand at about 7 million tonnes, about half of them in the DRC.As about 70 per cent of all globally mined cobalt is transported between the DRC and China via ports in South Africa, problems arose in January when Pretoria closed them in a bid to contain a new strain of the coronavirus.The situation eased when South Africa reopened 20 border crossings last month.A lack of vessels to transport the materials, high shipping costs, and limited capacity at ports and a shortage of trucks in China added to the logistical problems, Benchmark said.The easing of border restrictions in South Africa “should go some way to improving the availability of cobalt hydroxide in China, potentially dampening prices”, Miller said.But “we expect cobalt supply to remain tight over the coming months, and due to strength of battery demand we have a positive outlook for cobalt prices”.

One country that should be benefiting from the price rise is the Democratic Republic of Congo (DRC), which produces about two-thirds of the world’s cobalt, but supply shortages caused by logistical issues and fears of political instability in the Central African nation have hurt the industry. There are also concerns about the ethical sourcing of cobalt, including allegations of the use of child labour in mines.Gregory Miller, an analyst at Benchmark Mineral Intelligence in London, said the impact of the Covid-19 pandemic had slowed the movement of goods through the supply chain, including in the DRC.“Chinese companies continue to ship cobalt hydroxide to China from Africa, but there have been delays which have helped drive tightness in the market,” he said.Analysts at Benchmark Mineral Intelligence said the extent of the recent strong demand was reflected in China’s battery production figures, which rose by more than 300 per cent year on year in January.Miller said some major refiners in China had scaled back metal production in favour of cobalt chemicals “due to the strength of downstream demand from the battery industry and the healthy premium that existed for cobalt sulphate [refined cobalt product] over metal across February”.But he said these were not significant volumes and the reduction in metal production was not expected to have a significant impact on the market.With several metal producers in China, notably Huayou Cobalt and Yantai Cash, scaling back production to focus on chemicals, “the availability of cobalt metal is expected to tighten further over the coming weeks, driving further upwards pressure on prices”, Benchmark said in note to investors.George Heppel, a senior consultant at CRU Group in London, said the cobalt market was likely to be quite fragile over the next five years.“There should be sufficient material to keep battery makers and car companies well supplied, but it depends on the prompt start up of several mining projects in Indonesia and the DRC which carry various risks,” he said.While the DRC would continue to be the mainstay of the cobalt market because of its huge reserves, “we are seeing some modest diversification with more supply coming from assets in Indonesia in particular”, Heppel said.Chinese companies have invested heavily in the DRC. China Molybdenum, which owns the world’s second-largest cobalt mine – Tenke in the DRC – recently bought the Kisanfu resource from Freeport McMoRan for US$550 million. Other Chinese firms operating in the DRC include Huayou Cobalt, Chengtun Mining, Wanbao and CNMC.China is the world’s biggest importer of cobalt, buying about 95,000 tonnes of it every year. Global reserves of cobalt stand at about 7 million tonnes, about half of them in the DRC.As about 70 per cent of all globally mined cobalt is transported between the DRC and China via ports in South Africa, problems arose in January when Pretoria closed them in a bid to contain a new strain of the coronavirus.The situation eased when South Africa reopened 20 border crossings last month.A lack of vessels to transport the materials, high shipping costs, and limited capacity at ports and a shortage of trucks in China added to the logistical problems, Benchmark said.The easing of border restrictions in South Africa “should go some way to improving the availability of cobalt hydroxide in China, potentially dampening prices”, Miller said.But “we expect cobalt supply to remain tight over the coming months, and due to strength of battery demand we have a positive outlook for cobalt prices”.

A tonne of the metal sold for US$53,000 last week on the London Metal Exchange, its highest level since December 2018.The price rally started late last year when China’s State Reserve Bureau announced plans to stockpile cobalt because of a boom in sales of electric vehicles in China and Europe.

<div class='embed-wrap'><figure data-feedback='fb:likes,fb:comments'><img src='http://sa.kapamilya.com/absnews/abscbnnews/media/2021/business/03/15/cobalt.jpg' ><figcaption>The Democratic Republic of Congo produces about two-thirds of the world’s cobalt. Reuters</figcaption></figure></div>The price of cobalt, which is used in batteries for electric vehicles, as well as smartphones, tablets and laptops, has risen by about 65 per cent since January.

‘Chinese companies continue to ship cobalt hydroxide from Africa, but there have been delays which have helped drive tightness in the market,’ an analyst says. China is the world’s biggest importer of cobalt, buying about 95,000 tons of it every year.

‘Chinese companies continue to ship cobalt hydroxide from Africa, but there have been delays which have helped drive tightness in the market,’ an analyst says. China is the world’s biggest importer of cobalt, buying about 95,000 tons of it every year.

Cobalt prices soar as China stockpiles metal used in smartphones, electric car batteries | ABS-CBN News

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Cobalt prices soar as China stockpiles metal used in smartphones, electric car batteries

Cobalt prices soar as China stockpiles metal used in smartphones, electric car batteries