Cobalt prices are soaring as a surprise export ban from the world’s largest producing country fuels mounting uncertainty along the supply chain.
Prices for cobalt hydroxide — the main product exported from the Democratic Republic of Congo — have jumped 84 per cent since the country imposed a four-month suspension on shipments in February to rein in a glut.
It hit $10.5 a pound on Tuesday, the highest level since July 2023, according to Fastmarkets. The price of cobalt metal has jumped more than 43 per cent.
Congo accounts for about three-quarters of the world’s production of the battery metal and the spike in prices is triggering concerns about supply, with the market cautiously assessing spot transactions, inventory levels and the next potential measures that could follow the suspension.
Telf AG, the marketing agent for Congolese cobalt produced by Eurasian Resources Group, has also activated so-called force majeure clauses in supply contracts, allowing it to suspend deliveries due to events beyond its control. The full impact of the ban is still being assessed, but the company may not be able to meet all its delivery obligations, Telf told customers last month in a letter seen by Bloomberg.
“The cobalt export ban has been publicly announced by the DRC government, and like many other industry participants, we are currently assessing our options in response to these developments,” a spokesperson for the firm said in an emailed statement, declining to comment on commercial dealings.
Kazakhstan-backed ERG is the third-largest cobalt miner in Congo after CMOC Group Ltd. and Glencore Plc. A spokesperson for ERG did not immediately respond to an emailed request seeking comment.
While Congo allowed exports of cobalt registered with customs authorities up until Feb. 27, five days after the ban was imposed, a government decree last week said there will be no further exemptions. Longer term policies to balance the market, including export quotas, remain under consideration.
Intermediate stocks outside of Congo are estimated at about 85,000 tons of cobalt, in addition to inventories of cobalt sulphate, metal and precursors, according to CRU Group, an industry consultancy. This would represent six months’ worth of consumption assuming a steady rate of refined production, CRU said.
Still, the price jump is already sending ripples through the supply chain of the raw material used in everything from batteries to alloys.
Guangdong Yunchuang New Energy Industry Co., a Chinese manufacturer for cells used in electronics products, told customers last week that costs for all new battery orders have to be reviewed and that many producers of cobalt lithium oxide have stopped quoting prices, according to a document seen by Bloomberg and confirmed by the company’s chairman Wu Shicheng.
“While global cobalt prices will continue to rise speculatively in the coming weeks, the eventual magnitude remains very difficult to predict,” said CRU analyst Thomas Matthews.
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