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Cobalt shares rally after Glencore shocks market with sudden sales halt

Shares in cobalt producers rallied on Wednesday following news that Glencore, the world’s largest producer, had halted sales at its mine in the Democratic Republic of Congo.

Hong Kong-listed shares of China Molybdenum, which is the largest producer in the DRC after Glencore, rose by 11 per cent to end the day at HKD 3.46, their highest level in 11 weeks.

Glencore shocked the global cobalt market on Tuesday after it said that the discovery of uranium at its subsidiary Katanga Mining in the DRC meant it could no longer export cobalt from the country, the world’s largest producer of the metal.

Cobalt is a key metal for electric car batteries and demand is expected to double by 2025, according to Wood Mackenzie.

But cobalt prices have fallen by around 11 per cent this year on the expectation of greater supply from the DRC, especially from Glencore.

“This news highlights the fragility of the supply chain for battery metals when concentrated so heavily in one area,” Brian Menell, chief executive of London-based TechMet, which is looking to acquire stakes in projects mining cobalt and other technology metals, said. “We therefore expect to see short term volatility in the price due to this disruption.”

Katanga’s Kamoto mine in the DRC is one of the largest producers of cobalt, accounting for around 25 per cent of global supply this year. It was expected to ramp up to produce 34,000 tonnes of cobalt next year, making it the single largest producer in the world.

Katanga said the metal will be stockpiled until an Ion Exchange system is built to remove the uranium, which is expected to be completed by May next year.

Developers of new cobalt mines also rallied on the news, with Toronto-listed shares of eCobalt Solutions, which is building a project in Idaho, jumping by 9.5 per cent to 0.69 Canadian cents. Shares in Fortune Minerals, which is developing a cobalt and gold project in Canada’s Northwest Territories, rose by 21 per cent to 12 Canadian cents.

Source: FT.com

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