Cobalt prices soared due to supply concerns following the DRC export ban. ERG declared force majeure on cobalt deliveries as the government suspended exports for four months to manage oversupply. This led to price increases in both European and Chinese markets, with potential future export quotas under consideration.
On Monday, cobalt prices experienced a significant surge due to rising concerns over supply shortages following the Democratic Republic of Congo’s (DRC) export ban. The Eurasian Resources Group (ERG) declared force majeure on cobalt deliveries, attributing this to the export restrictions imposed by the DRC on the essential battery material. As a result, cobalt trading was halted on China’s Wuxi Stainless Steel Exchange after prices surged nearly 12% to approximately 240 yuan per kg, marking the highest price point since October.
In Europe, the price of standard grade cobalt in Rotterdam rose to $12.25 per pound on March 7, a considerable increase from $10.80 per pound on March 4 and $9.95 per pound on February 24, according to pricing agency Fastmarkets. This spike follows the DRC government’s decision to suspend cobalt exports for four months to address oversupply issues, which had previously reduced prices to nine-year lows around $10 per lb, or $22,000 per metric ton.
As a result of the export ban, ERG, which is based in Luxembourg and is the third largest cobalt producer in Congo, activated force majeure on its cobalt deliveries from the Metalkol operation. This facility is critical as it accounts for roughly 9% of the total cobalt production in Congo, highlighting the urgency of the situation. Experts indicate that with ERG’s force majeure in place, traders are reacting to an emerging supply crisis, prompting a valuation uptick.
One anonymous European trader indicated that the market response was due to a new understanding of the significance of the DRC’s export restrictions. The trader noted that the Chinese market is currently withholding cobalt metal, intensifying supply concerns. Darton Commodities estimates that Metalkol produced approximately 19,200 metric tons of cobalt in hydroxide last year, contributing to over 7% of global production.
The DRC’s cobalt export ban is set for reevaluation in three months, with the possibility of modification or termination based on market conditions. Future plans from the Congolese government also include setting export quotas that would be negotiated during the period of suspension. Other major producers within the DRC include Glencore, which is listed in London, and China’s CMOC Group.
In summary, cobalt prices have surged following the DRC’s export ban amid fears of supply shortages. The declaration of force majeure by ERG has prompted immediate market reactions, resulting in significant price increases both in Europe and China. The situation emphasizes the critical role of the DRC in the global cobalt supply chain, as future policies regarding exports will likely further impact prices and availability.
Original Source: www.mining.com
