Cobalt prices soared following a ban on exports from the Democratic Republic of Congo, with ERG declaring force majeure on deliveries. This led to a nearly 12% price increase, reaching approximately 240 yuan per kg, and boosts in European prices. The Congo government imposed the ban to address an oversupply, and ERG’s operations are significantly impacted. The ban will be reviewed in three months for potential adjustments or quotas.
Cobalt prices experienced a significant surge due to rising supply concerns following a ban on exports by the Democratic Republic of Congo. This situation arose after the Eurasian Resources Group (ERG) declared force majeure, indicating an inability to fulfill contracts related to cobalt deliveries. As a result, cobalt prices on China’s Wuxi Stainless Steel Exchange surged nearly 12%, reaching 240 yuan per kilogram, a record high since October.
European cobalt prices also witnessed an increase, with standard grade cobalt prices in Rotterdam rising to $12.25 per pound on March 7, up from $10.80 just days prior. The spike in prices is attributed to a four-month export suspension imposed by Congo’s government to manage an oversupply that had driven prices to lows of approximately $10 per pound, or $22,000 per metric ton.
The force majeure declared by ERG, the third-largest producer in Congo, has intensified market conditions. Traders have noted that they are holding on to their reserves as they recognize the gravity of the situation, with one trader remarking on the seriousness of Congo’s export intentions. ERG’s Metalkol operation contributes significantly to cobalt production in the region, producing approximately 19,200 metric tons in the previous year, accounting for 9% of Congo’s output.
The Congolese export ban is scheduled for review in three months, potentially leading to the introduction of cobalt export quotas during the suspension. Other major producers of cobalt in the DRC include Glencore and CMOC Group, underlining Congo’s pivotal role in the global cobalt supply chain.
In conclusion, the recent surge in cobalt prices is primarily driven by a ban on exports by the Democratic Republic of Congo and the force majeure declared by ERG. With substantial production implications and potential changes in export policies, the cobalt market is experiencing heightened volatility. The ongoing review of the export ban will critically influence future pricing and supply dynamics.
Original Source: www.mining.com
