How the cobalt market fell victim to allure of electric cars

Cobalt prices were surging so much last year that thieves were carrying out elaborate heists at warehouses in Europe’s busiest port. Now, prices are in free fall and mining companies are taking the financial hit.

The story of what happened is the classic boom-bust in commodities. In the case of cobalt, it was Elon Musk’s vision of electric cars gaining mass appeal and an ensuing rush of money to bet that the world will need a lot more cobalt, a critical component of lithium-ion batteries.

Adding to the allure was a widely-held view that cobalt supply is constrained. Geologically speaking, the metal isn’t rare, but almost exclusively produced as a byproduct of copper and nickel mining. The idea that more cobalt supply depended on higher prices for those metals turned out to be a myth.

Instead, the surge in cobalt prices triggered a boom in supply from the Democratic Republic of Congo. Prices have plunged more than 60 percent from a peak in April 2018, to $15.88 a pound, according to Fastmarkets MB.

Supply Boom

Glencore Plc, the top producer of cobalt, extended that lead in 2018 with a major expansion at its mines in Congo. Chinese miners also ramped up production to feed growing demand from battery makers.

Cobalt’s Klondike

Record prices also unleashed a modern-day gold rush in Congo. Thousands of small-scale miners scrambled to exploit rich mineral deposits, often working illegally in dangerous makeshift pits, where ore is extracted by hand. Supply from these so-called artisanal miners more than doubled between 2016 and 2018, according to trading house Darton Commodities.

Inventory Build

Glencore is accumulating big inventories at the Kamoto mine site and storage depots in South Africa, after suspending sales from the mine following the discovery of radioactive ore.

Low cobalt prices have also hurt Glencore financially. The company missed analyst estimates in its recent earnings report.

Rebound Ahead?

Even though the current cobalt market is depressed, there’s still a lot of optimism about the future. Automakers are still planning to roll out electric-car models and Glencore could start clearing its cobalt backlog in 2020, by which time car sales should be starting to surge.

Citigroup Inc. sees cobalt rallying 16 percent this year as the Katanga mine stoppage effectively tilts the market into deficit. Glencore chief Ivan Glasenberg described cobalt’s weak performance in 2018 as a “blip” and said prices are probably approaching their low point.

News No: 3813
Date: 2019/03/02 - 22:41
News Source: MINING.COM

cobalt  electric cars  Europe  mining  lithium 


Leave a Comment:


Essel Mining Cuts Iron Ore Lump Prices by Rs 400/MT (USD 6/MT)- Sources

Eseel Mining, a unit of Aditya Birla group is set to reduce its offers for iron ore lumps by Rs 400/t ($5.6). Essel Mining is one of the largest merchant iron ore miners with an annual capacity of 10 million tonnes per annum in the state of Odisha.

Funds blast Goldcorp chair's 'terrible' $12 million package

A lucrative retirement package for the chairman of Goldcorp Inc. is raising the hackles of investors ahead of a key vote on the company’s planned merger with Newmont Mining Corp.

SQM receives environmental approval for Chile lithium plant expansion

SANTIAGO – Chilean lithium miner SQM on Thursday received environmental approval to expand its lithium carbonate production plant, the local environmental regulator told Reuters, marking a milestone as the company seeks to boost output of the coveted ultralight battery metal.

Gold-backed ETFs fell in February, following four months of inflows

After four straight months of inflows, holdings in global gold-backed ETFs and similar products fell in February by 33 tonnes to 2,479t, equivalent to $1.3 billion in outflows, and gold trading volumes decreased 5% below the 2018 averages to $104 billion per day, according to data from the World Gold Council (WGC).

Pan African Minerals’ $2.2B claim over giant manganese deposit contract dismissed by court

Pan African Minerals, a unit of Timis Mining Corp., won’t resume production at its Tambao mine in Burkina Faso as a Paris-based arbitration court has dismissed the company’s $2.2 billion claim against the West African nation.

INSTEX President in Tehran for Talks with Iranian Officials

The president of the European Union’s financial mechanism for trade with Iran known as the Instrument in Support of Trade Exchanges (INSTEX) has traveled to Tehran to hold talks with senior Iranian officials on ways to make the mechanism operational.
Upcoming Events
 Mines & Metals

Mine & Business Today

 Scrap & Recycling


Our partners