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As cobalt crash bottoms out, supplies expected to keep prices in check

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Feb 12, 2019 9:16 AM 1+ week ago

As cobalt crash bottoms out, supplies expected to keep prices in check February 12, 2019 09:16 AM PRATIMA DESAI {{ source.title }} LONDON Cobalt's near year-long price slide is finally coming to an end, but high inventories of the battery metal will stop prices quickly reclaiming 2018's 10-year highs. London Metal Exchange prices have crashed to two-year lows of $32,000 a ton compared with levels near $100,000 in the first half of 2018. The drop was sparked by rising supplies from the artisanal and industrial sectors in the Democratic Republic of Congo and a surplus of cobalt chemicals, used to make rechargeable batteries to power electric vehicles. Traders looking to buy cobalt to cover forward sales are expected to help a price recovery, but industry sources say it is likely to be muted as high stocks in Africa will provide a buffer against supply shocks. The DRC accounts for most of the world's cobalt supplies. It comes in the form of hydroxide which is converted into chemicals for the lithium ion batteries also used in mobile devices. "High cobalt prices encouraged new supplies last year. Artisanal mining supply has exhibited enormous growth in recent years to bridge the gap between supply and demand," said CRU analyst George Heppel. "However, artisanal mining supply has declined in the past six months due to lower payables and the falling cobalt price. Artisanal is the swing producer in the cobalt market." CRU estimates supplies of cobalt from Congo's artisanal sector jumped to 24,000 tons last year from 19,100 tons in 2017 and 10,500 tons in 2005, when prices hit 12-year lows below $10 a pound. Rising supplies are also expected from higher output at projects such as Glencore's Katanga mine, expected to produce 26,000 tons this year from 11,000 tons last year. Eurasian Resources Group plans to increase cobalt output at its Congo Metalkol facility to 20,000 tons annualized by Read more.

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