Copper and cobalt markets at risk of supply disruptions – by Neil Hume and Henry Sanderson (Financial Times – April 30, 2018)

Glencore and Freeport-McMoRan under pressure in DRC and Indonesia

The commodities industry has been focused on the crisis surrounding Rusal, the Russian aluminium producer, but a number of disputes entail higher prices for copper and cobalt.

In the past week, the Democratic Republic of Congo’s state-owned mining company has filed legal action against Glencore, while in Indonesia the government has imposed new environmental standards on the giant Grasberg copper and gold mine owned by Freeport-McMoRan.

“Political risk has gone from being little thought about to being a major concern,” Michael Stoner, an analyst at Berenberg, said.

The challenges come as resource rich nations across the world cast an envious glance at mining companies, who have emerged from the worst downturn in a generation and are now rewarding shareholders with bumper dividends.

Cobalt prices have quadrupled since the beginning of 2016, while copper prices have risen 38 per cent — helping big mining houses to turn large profits. Analysts say further gains could follow if supply disruptions materialise. In the DRC, President Joseph Kabila has signed into law a new mining code that will lead to higher taxes and royalties on foreign miners.

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