LONDON (Reuters) – The cobalt market will record a supply surplus both this year and next, according to heavyweight commodities research house CRU. This might seem a little surprising, given all the bullish hype surrounding a metal that more than doubled in price last year.
CRU itself has drastically revised its original assessment of a sustained supply shortfall due to strong demand growth from the battery sector. What has changed its mind?
In short, it’s the return of the Katanga mine after two years of suspended activities. Once fully operational, Katanga will be the “largest cobalt-producing mining project in the world”. (CRU Insight, Jan. 4 2018)
Bulls needn’t panic just yet, however. CRU doesn’t expect much of a price reaction. Rather, “big future consumers of cobalt like automotive companies, tech companies and battery manufacturers will choose to invest and stockpile” material to try and mitigate future supply risk.
Because the return of Katanga simply increases the dependence of the whole cobalt supply chain on just one highly problematic country, the Democratic Republic of Congo (DRC).