Sep 4, 2020

Is North America the next cobalt producing giant?

Cobalt
DRC
USA
mining
Lemaiyan Lemein
2 min
Potential reserves in Canada, and new investments in exploration, may help the North American cobalt industry to rival the Democratic Republic of Congo
Potential reserves in Canada, and new investments in exploration, may help the North American cobalt industry to rival the Democratic Republic of Congo...

In the last decade, increased demand for rechargeable batteries and electric vehicles has led to growing demand for cobalt. Cobalt possesses high thermal stability, high energy storage capacity and is resistant to corrosion, making it a very suitable material to use in the clean energy industry.

Approximately 70% of the world’s cobalt is produced in the Democratic Republic of Congo (DRC). Almost all of this is exported to China, which in turn is the largest exporter of refined cobalt.

However, the heavy reliance on cobalt from the DRC continues to cause malpractices within the supply chain. Ethical and human rights issues - including child labour, unregulated mining and corruption - taint the country’s cobalt industry. Increased criticism from consumers, who demand a supply chain untouched by these issues, has resulted in major players in the industry sourcing the mineral from other countries. 

DRC has the world’s biggest cobalt reserves, with approximately 3.6 million tons. However, North America is estimated to have a total of 285,000 tons of cobalt reserves, of which Canada’s share is 230,000 tons. Although these volumes are much smaller than those found in Congo, Canada’s cobalt is of the highest grade; so much so, in fact, that investors including Bill Gates have set up a fund for cobalt exploration on the continent.

The development of cobalt mining in North America will help to increase competition in cobalt production, which, it is hoped, will in turn encourage ethical mining in Congo. 

To push for more transparency in cobalt mining, more than 380 companies have committed to source the mineral from responsible mines, through the Responsible Mineral Initiative. BMW is among the leaders in this initiative, and has signed a $110mn deal to source cobalt from Morocco in a bid to avoid working with the DRC. Other companies including Ford, IBM and Tesla are seeking to change the landscape for cobalt mining, either by employing blockchain or by looking for other sources.

With more than 50 deposits in the US and others in Canada, there is potential for the region to produce high-grade cobalt while maintaining an ethical and transparent supply chain.

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Lemaiyan Lemein is a mining engineer, researcher and journalist based in Kenya.

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May 6, 2021

Copper, iron ore surge as Chinese investors unleash demand

Copper
Iron ore
Renewables
EVs
3 min
Iron ore broke $200 a tonne for the first time, while copper approached a record high as Chinese investors unleashed fresh demand following May holiday

The reopening of major industrial economies is sparking a surge across commodities markets from corn to lumber, with tin climbing above $30,000 a tonne for the first time since 2011 on Thursday.

In the wake of mounting evidence of inflation fuelled by higher raw materials prices, investors are also increasingly focused on when the U.S. Federal Reserve might start throttling back its emergency support.

Copper

Many banks say the rally has further to run, particularly for copper, which will benefit from rising investment in new energy sectors. Copper is at the highest in a decade, fueling bets it will rally further to take out the record set in February 2011. Steel demand is surging as economies chart a path back to growth just as the world’s biggest miners have been hampered by operational issues, tightening ore supply.

“The long-term prospects for metals prices are ‘too good’ and point to higher prices in the next few years,” said Commerzbank AG analyst Daniel Briesemann. “The decarbonization trends in many countries, which include switching to electric vehicles and expanding wind and solar power, are likely to generate additional demand for metals.”

Trading house Trafigura Group and several major Wall Street banks including Goldman Sachs Group Inc. and Bank of America Corp. expect copper to extend gains.

Copper rose as much as 1.6% to $10,108.50 a ton on the London Metal Exchange before trading at $10,080 as of 4:07 p.m. in London.

Bloomberg

Iron Ore

Benchmark spot iron ore prices rose to a record, while futures in Singapore and China climbed.

The boom comes as China’s steelmakers keep output rates above 1 billion tons a year, despite a swath of production curbs aimed at reducing carbon emissions and reining in supply. Instead, those measures have boosted steel prices and profitability at mills, allowing them to better accommodate higher iron ore costs.

Spot iron ore with 62% content hit $201.15 a ton on Thursday, according to Mysteel. Futures in Singapore jumped as much as 5.1% to $196.40 a ton, the highest since contracts were launched in 2013. In Dalian, prices closed 8.8% higher.

Erik Hedborg, Principal Analyst, Steel at CRU Group commented: “Recent production cuts in Tangshan have boosted demand for higher-quality ore and prompted mills to build iron ore inventories as their margins are on the rise. Iron ore producers are enjoying exceptionally high margins as well, around two thirds of seaborne supply only require prices of $50 /dmt to break even.”

China

Still, some analysts including Commerzbank’s Briesemann expect a short-term correction as metals become detached from fundamentals. There’s also a risk that China could engage in policies that may cool demand for iron ore and copper.

The metals rally has boosted concerns about short-term Chinese demand. Some manufacturers and end-users have been slowing production or pushing back delivery times after costs surged, while weaker-than-expected domestic consumption has opened the arbitrage window for exports.

Tin climbed as much as 2% to $30,280 a ton on the LME, boosted by rising orders for the soldering metal. Tin is at the highest since May 2011, with a 48% gain this year making it the best performing metal on the LME.

 


 

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