Cobalt’s meteoric rise at risk from Congo’s Katanga – by Henry Sanderson (Financial Times – March 14, 2017)

Reopening of mothballed mine and uncertainty over China demand weighs on metal’s price

Hedge funds and speculators betting that the electric vehicle revolution will drive prices of battery material cobalt into the stratosphere could be wrongfooted.

Next year Glencore, the world’s biggest producer of the bluish metal, is due to bring the Katanga mine in the Democratic Republic of Congo back on line after a $430m overhaul of its processing system. The operation has the potential to add as much 22,000 tonnes of cobalt to a market with annual output of around 100,000 tonnes.

That could bring the price of cobalt, which has surged 135 per cent this year, back to earth with a bump. Goldman Sachs analysts say the resumption of production at Katanga “will significantly change the supply dynamics” for cobalt and ensure the market is well supplied up to the end of 2019.

“We believe the resumption of Glencore’s Katanga mine will end the supply shortage,” Goldman analysts noted of the metal, which is an essential part of most lithium-ion car batteries.

Speculative buying has added vim to a metal already helped by a strengthening in demand and a poor supply picture. When commodity prices crashed at the end of 2015 and into 2016, several copper and nickel mines were forced to curtail production. Cobalt is a byproduct of the two metals.

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