Cobalt prices increased sharply following a Democratic Republic of Congo export ban and ERG’s declaration of force majeure. Trading on the Wuxi Stainless Steel Exchange halted as prices reached their highest since October. The DRC’s ban aims to address previous oversupply issues, significantly impacting the market.
Cobalt prices surged on Monday due to heightened concerns over supply following a Democratic Republic of Congo (DRC) export ban. Eurasian Resources Group (ERG) declared force majeure on deliveries related to this ban, causing cobalt trading on China’s Wuxi Stainless Steel Exchange to halt as prices spiked nearly 12% to approximately 240 yuan per kg, the highest level observed since October.
European cobalt prices also experienced a significant increase, with standard grade cobalt in Rotterdam rising to $12.25 per lb on March 7, up from $10.80 on March 4 and $9.95 on February 24, according to Fastmarkets data. This surge comes after DRC’s government temporarily suspended cobalt exports for four months to address the oversupply issues, which had previously driven prices to nine-year lows of around $10 per lb or $22,000 per metric ton.
ERG’s declaration of force majeure indicates an inability to meet contractual obligations due to the DRC’s export ban. As one of the largest cobalt producing companies in the DRC, ERG’s action has ignited concerns among traders. A European trader remarked that the situation signals a serious intent from the DRC regarding their cobalt policies, leading to fewer metal sales from China.
The Metalkol operation by ERG in Congo has reported approximately 19,200 metric tons of cobalt in hydroxide, contributing to about 9% of the country’s total production last year. Overall, Metalkol’s output made up 7% of global cobalt production last year, highlighting its significance. The DRC government plans to reassess the export ban in three months, with possible alterations based on the situation and the introduction of cobalt export quotas during the suspension period.
In summary, cobalt prices have surged due to supply concerns stemming from the DRC’s export ban and ERG’s force majeure declaration. This development, coupled with the DRC’s plans to manage cobalt exports through quotas, indicates potential changes in the cobalt market landscape. Continuous monitoring of this situation will be crucial for producers and traders alike.
Original Source: www.mining.com
