Cobalt Prices Surge as Congo Export Ban Sparks Supply Concerns
Following the bold move of the Democratic Republic of Congo (DRC) to ban Cobalt exports, Cobalt prices increased on Monday, as major concerns over supplies doubled. What made the situation worse is when one of the largest producers in the region, the Eurasian Resources Group (ERG), declared force majeure on the Cobalt deliveries. These events created shock waves through the global markets. As the traders are trying to cope up with the rapidly changing landscape.
The producer of more than 70% of the world’s Cobalt, the DRC, announced a four-smonth export ban on Cobalt last month. The aim of this controversial move was to tackle oversupply and also stabilise prices. This had led to nine-year lows around $10 per lb ($22,000 per metric tons). Even though the vision of this ban has been clear, it had such a chaotic impact on the global market.
After the prices jump to nearly 12% to about 240 yuan per kg, China’s Wuxi Stainless Steel Exchange was temporarily frozen. And this is the highest level since October. Similarly, the prices climbed sharply in Europe, with standard-grade Cobalt warehoused in Rotterdam increasing up to %12.25 per lb on March 7, up from $10.80 only a few days earlier.
ERG Declares Force Majeure
The Luxembourg-based mining leader, as well as the third-largest Cobalt producer in the DRC, declared force majeure – typically invoked when unforeseen circumstances – on Cobalt deliveries from its Metalkol operations. The force majeure’s circumstances are critical, like the government export ban, preventing a company from fulfilling its contractual obligations.
Resources told Reuters. The ERG’s declaration triggered panic among traders and buyers, a resource told Reuters. Two European Cobalt traders revealed anonymously to Reuters the ERG force majeure effect.
One of the traders said anonymously: “The Chinese are not (selling) metal. There is a growing realisation that Congo means business.”
“They are holding on to what they have. ERG’s force majeure has made them sit up and take notice.” He added.
A majeure player in the global market, EGC’s Metalkol operation landed in the mineral-rich Katanga region that takes place in the DRC. According to Darton commodities, who is also a specialist supplier in the Cobalt products. Last year, Metalkol produced bout 19,000 metric tons of Cobalt hydroxide. About almost 9% of the DRC’s total output of 7% of global production.
