Glencore could do for cobalt what it did for zinc – double the price

The price of cobalt is up 18% over the last two weeks after Glencore announced it is halting operations at its Mutanda copper-cobalt mine in the Congo – until at least 2021.

Considering that Mutanda is the world’s largest cobalt mine and responsible for a fifth of global output in a market of just 135kt per year, the response has been fairly muted. And at $31,500 a tonne, the commodity is still trading some two-thirds below near 10-year peaks hit in March last year.

A new report by Capital Economics urges cobalt bulls to be patient, pointing to Glencore’s similar action in 2015 to shore up the zinc market, which lead to a doubling of the price in fewer than three years.

Ross Strachan, senior commodities economist at Capital Economics, predicts a near doubling in the price by end-2021 from the level before the Mutanda care and maintenance news: 

We think that this mine closure will eradicate the surplus in the cobalt market and we now forecast the market to be in a small deficit in 2020 and 2021. 

Crucially this is underpinned by strong demand due to our expectation of rapid growth in electric vehicle production. 

This will offset the increase in supply from the existing pipeline of projects, including Glencore’s Katanga, and a likely upturn in artisanal mining, which had slumped this year in conjunction with the price.

London-based Capital Economics predicts cobalt to reach $40,000 by the end of next year and add another $10,000 by the end of 2021. 

Click here to continue reading...

Subscribe to the RSD email list and get the latest resource stock activity directly to your inbox, for free.

Part of the Stock Digest family of websites

Small Cap Stock Digest



Name Last Change
DOW 27147.10 0.13%
S&P 500 3006.73 0.03%
NASDAQ 8177.39 0.11%
TSX 16800.29 0.21%
TSX-V 584.91 0.00%

Resource Commodities

Name Last Change
Gold 1496.80 0.39%
Silver 17.73 0.39%
Copper 2.60 2.596
Platinum 901.00 0.67%
Oil 58.11 2.12%
Natural Gas 2.64 1.18%
Uranium 25.53 0.59%