Cobalt prices rose significantly due to fears over supply following the Democratic Republic of Congo’s export ban. ERG declared force majeure on cobalt shipments, triggering price increases in both China and Europe. The Congo government suspended exports to manage surpluses which had driven prices to new lows. The situation remains dynamic with a review of the ban forthcoming.
Cobalt prices experienced a significant increase on Monday due to heightened supply concerns following the Democratic Republic of Congo’s export ban. Eurasian Resources Group (ERG) declared force majeure on cobalt deliveries, influencing trading activity on the Wuxi Stainless Steel Exchange, where prices surged nearly 12% to approximately 240 yuan per kg, marking the highest price since October.
European cobalt prices also escalated, with standard grade cobalt stored in Rotterdam rising to $12.25 per lb by March 7, up from $10.80 on March 4, and $9.95 on February 24, as reported by Fastmarkets. The Congolese government announced a four-month suspension of cobalt exports to address excess supply that had driven prices to nine-year lows around $10 per lb or $22,000 per metric ton.
ERG’s declaration of force majeure, which is invoked under unforeseen circumstances obstructing a company’s contractual obligations, was prompted by this export ban affecting its Metalkol operation. ERG is the third-largest cobalt producer in Congo, which dominates global cobalt production essential for lithium-ion batteries in electric vehicles.
Industry experts attributed the price surge to ERG’s actions, indicating that market players are beginning to recognize the seriousness of the export ban. One anonymous trader noted the reluctance of Chinese sellers in the market, stating, “There is a growing realization that Congo means business.”
The Metalkol operation is reported to have produced around 19,200 metric tons of cobalt hydroxide, which corresponds to roughly 9% of Congo’s total production last year. Moreover, it accounts for approximately 7% of the global cobalt output, which exceeded 280,000 tons in the previous year.
The Congolese export ban will undergo a review in three months, with the possibility of adjustments based on the circumstances at that time. The government also plans to introduce cobalt export quotas that will be negotiated during the suspension period, signaling potential future changes in the logistics of cobalt trading in the region.
In summary, cobalt prices have surged due to supply concerns following the Democratic Republic of Congo’s export ban. ERG’s declaration of force majeure has significantly affected global markets, illustrating the importance of Congolese production in the global cobalt supply chain. As the situation evolves, with a review of the export ban expected in three months, stakeholders are watching for potential adjustments in export policies that could further impact prices.
Original Source: www.mining.com
