Surge in Cobalt Prices Driven by Supply Fears Amid Congo Export Ban
Cobalt prices surged due to supply fears following the Democratic Republic of Congo’s export ban, with ERG declaring force majeure on deliveries. Prices increased nearly 12% on the Wuxi Stainless Steel Exchange. The government’s export suspension is aimed at addressing oversupply, and future quotas may be established after a review in three months.
Cobalt prices surged on March 7th due to concerns regarding supply shortages following the Democratic Republic of Congo’s ban on cobalt exports. This led Eurasian Resources Group (ERG) to declare force majeure on cobalt deliveries from its Metalkol operation, causing prices to rise nearly 12% to approximately 240 yuan per kg on the Wuxi Stainless Steel Exchange, marking the highest price since October.
European cobalt prices also experienced a significant increase, with standard grade cobalt stored in Rotterdam jumping to $12.25 per pound. This increase followed a prior rise from $10.80 per pound on March 4 and $9.95 on February 24, as reported by pricing information agency Fastmarkets. The Congolese government implemented the export suspension to address oversupply issues that had pushed prices down to their lowest levels in nine years.
The declaration of force majeure by ERG, recognized in circumstances where unforeseen events prevent contract fulfillment, was a key factor in the price increase. The company is the third-largest cobalt producer in Congo, which is the world’s leading producer of cobalt, essential for lithium-ion batteries utilized in electric vehicles. Industry sources noted that the situation has prompted Chinese traders to withhold cobalt supplies, resulting in an awareness of the seriousness of Congo’s intentions.
ERG’s Metalkol is estimated to have produced approximately 19,200 metric tons of cobalt in hydroxide, or about 9% of Congo’s total cobalt production last year. Additionally, Metalkol contributed to 7% of the global cobalt supply, nearing 280,000 tons in total production. The export ban will be re-evaluated in three months, with potential modifications or terminations based on forthcoming results. Moreover, the Congolese government aims to set cobalt export quotas to be negotiated during this suspension period.
In summary, cobalt prices have surged due to supply fears following the Democratic Republic of Congo’s export ban, which prompted ERG to declare force majeure on cobalt deliveries from its Metalkol operation. The market has reacted sharply, as increases in both Chinese and European cobalt prices reflect heightened concerns over supply. This situation may lead to significant changes in cobalt trading and production in the near future, particularly as the Congo government plans to reevaluate export policies and introduce quotas.
Original Source: www.mining.com
