Cobalt

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1 Cobalt
2 General uses
3 Pricing structure
4 Current consumption trends
5 Price forecasts
6 Major producers
7 External References

[edit] Cobalt

Cobalt is a hard, lustrous, silver-grey metal, a chemical element with symbol Co. It is found in various ores, and is used in the preparation of magnetic, wear-resistant, and high-strength alloys. Its compounds are used in the production of inks, paints, and varnishes.

[edit] General uses

Cobalt is used mainly in production of various alloys. It increases hot-resistance of steel, its strength and other properties. Cobalt is used in magnets and in magnetic recording media (low-coercive materials) as well as in materials of electromagnet cores, transformers etc. Hard-magnetic alloy such as samarium-cobalt magnets, are used in instrument engineering.^[1]

Cobalt use in rechargeable batteries has increased by 300% in four years, with the fastest growing segment being fuel-efficient hybrid cars. U.S. sales of hybrid cars are forecast to increase from 350,000 this year to over one million by 2012, while sales of cell phones and laptops are also surging.^[2]

[edit] Pricing structure

Since 1993 cobalt prices were held down largely by sales from the U.S. Government stockpile, and lower grade cobalt material coming from the former Soviet Union. With these sources depleting, the market has little inventory to draw from, now relying primarily on new production. In late 2006 Russia-based Norilsk, already accounting for 20% of the world’s nickel and cobalt production, announced the buyout of U.S.-based OM Group’s (OMG) substantial nickel interests. OMG was the world’s largest producer and manufacturer of cobalt products as a by-product of their nickel production.^[3]

Cobalt prices have virtually doubled each of the last two years, and are currently hitting record levels, with BHP Billiton and Norilsk Nickel reportedly increasing their offer prices at every sale. ^[4]

At the beginning of 2007, the average offer spread cobalt price stood at about US$25 per pound, an increase of about US$12 per pound from the beginning of 2006. The price soared to US$40.25 at the end of the year due to surging demand for batteries for mobile phones and hybrid cars as well as supply constraints following a moratorium on the export of raw concentrates from the DRC in October.^[5]

[edit] Current consumption trends

Cobalt consumption in 1995 was only 24,000 tonnes, but during the past 10 years has grown at an average rate of 12.9% per year, and continues to grow.

The chart below suggests that the market will easily absorb increased cobalt production. The indicated supply deficits in 2007 and 2008 are a result of increasing demand and expected lag in production from projects proposed by other companies.^[6]

[edit] Price forecasts

Cobalt COB-CATH-LON, which is used to make batteries, superalloys and other industrial products, could drop to about $15 a pound as a result of mining projects in the DRC, predicted Robert Baylis, senior analyst.

Cobalt prices on the spot market in Europe are hovering around $49 per lb, on strong demand and scarce supplies. This is an all-time high, according to Reuters data and the U.S. Geological Survey's website, but some veteran minor metals traders say cobalt for a short time traded at $50 a pound in 1978.

While some traders expect that cobalt prices could possibly go higher as the U.S. Defense Logistics Agency exhausts its stocks of cobalt, Baylis said that new production could help take the foam off the frothy market. The analyst forecast that up to 6,000 tonnes of new cobalt production could be added to global supply by 2010, continuing to rise after that point. Current annual production is about 58,000 tonnes.^[7]

[edit] Major producers

The vast majority of these resources are in nickel-bearing laterite deposits, with most of the rest occurring in nickel-copper sulfide deposits hosted in mafic and ultramafic rocks in Australia, Canada, and Russia, and in the sedimentary copper deposits of Congo (Kinshasa) and Zambia. In addition, millions of tons of hypothetical and speculative cobalt resources exist in manganese nodules and crusts on the ocean floor.

^[8] ^[9]