[Cobalt] Glencore Is on to a Winner With This Obscure Metal – by Mark Burton (Bloomberg News – March 8, 2017)


Cobalt is having a moment in the spotlight. Historically a minor byproduct of copper and nickel mining, the metal is a key ingredient for lithium-ion batteries and now a growing money maker for Glencore Plc.

In the past eight months, prices more than doubled on speculation that supply won’t keep up with demand for batteries in electric cars. Glencore, the largest cobalt producer, plans to about double output by 2018, and only coal, copper and zinc offer more of an earnings boost when prices rise.

Cobalt, which has been in oversupply for years, was often treated as an afterthought at the copper and nickel mines where it’s found. Now, demand for the once obscure metal that’s mined largely in the Democratic Republic of Congo is soaring as it graduates from mobiles to larger batteries in electric vehicles and homes.

At Glencore, cobalt is “starting to make a significant difference to earnings,” and is helping reduce costs in its larger copper mining business, Tyler Broda, an analyst at RBC Capital Markets in London, said by phone. “Glencore’s copper business is now one of the best-placed in the world in terms of cost right now, and byproducts like cobalt have played a big part in that.”

Every 10 percent change in the cobalt price affects Glencore’s earnings before interest, taxes, depreciation and amortization by about $150 million, according to Barclays Plc analysts including Ian Rossouw.

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