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Historical cobalt prices (US$/t) – LME 3m forward contracts trades at $55,000/t
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0
20,000
40,000
60,000
80,000
100,000
120,000Ja
n-0
0
Jan
-01
Jan
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-17
Cobalt high grade MB price ($/t) Cobalt low grade MB price ($/t)
- Price induced increase in recycling?- Substitutes?
Cobalt substitutes
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Cobalt substitues
Batteries Iron-phosphorous, manganese
Superalloy Nickel-based alloys or ceramics jet engines
Catalysts Nickel, rhodium, hydroformylation catalysts
Hard tools Iron-copper in diamond tools
Pigments Cerium, iron, lead, manganese, vanadium
Magnets Barium, strontium ferrites, neodymium-iron-boron or nickel-iron alloys
Source: USGS
Not irreplaceable, though involves a loss in product performance in some
applications
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42%
16%
10%
7%
5%
5%
7%4% 4%Batteries
Superalloy
Hard materials
Catalysts
Pigment
Magnets
Demand dominated by chemical applications: batteries + catalysts + pigments + feedstuffs = 58% (IDC, 2015)
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Cobalt major uses
Main cobalt uses by type of product
Batteries Hydroxide, powder, LiCoO2
Superalloy Metal, recycle
Hard materials Powders (fine and very fine)
Catalysts Salts including carbonate, culphate, nitrate, acetate, metal
Pigment Oxide, sulphates, hydroxide, carbonate
Magnets Metal, powders, recycle
Hardfacing Metal & mesh powders, recycle
Tyre adhesives, soaps, driers Soaps & complexes made from metal startgin point
Feedstuffs Mainly sulphate, but some carbonate and hydroxide
Source: CDI (2011)
Chemical applications dominated by batteries: Li-ion batteries (cathodes are 60% Co),
Ni metal hydride (NMH, cathodes are 15% Co), Ni cadmium (NiCd, cathodes are 1-5%
Co)
Catalytic applications: wide use in petrochemical sector to remove sulphur from
crude oil
Metallurgical applications: cobalt based “superalloys” have better temp resistance,
hardness and wear characteristics (found in jet engines, power generation turbines
and even prosthetic hips/joints that can contain up to 62% Co)
Very little liquidity for specialty metals on LME –low trading volumes and wide bid/ask spreads for cobalt/moly
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0.01% 0.05% 0.05% 0.02% 0.07% 0.17%
2.90%
0.92%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
Co
pp
er
Alu
min
ium
Nic
kel
Zin
c
Lead Ti
n
Mo
lyb
den
um
Co
bal
t
Bid/Ask spread as % of mid price
50
25
5559
25 24
0.00 0.060
10
20
30
40
50
60
Co
pp
er
Alu
min
ium
Nic
kel
Zin
c
Lead Ti
n
Mo
lyb
den
um
Co
bal
t
Volumes traded (LME) relative annual mine supply 2016
Around 8,000 of cobalt futures contracts one ton each have been traded in 2016 versus 1.4bn t,1.0bn t and 0.7bn t in aluminium, copper and zinc futures/options contracts
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48%
14%
7%
4%
4%
4%
4%
15%
World reserves, 7mt as of 2016 (USGS)
DRC
Australia
Cuba
Philippines
Canada
Zambia
Russia
Other
54%
6%
6%
5%
4%
4%
3%
18%
Mine production, 123kt in 2016 (USGS)
DRC
China
Canada
Russia
Australia
Zambia
Cuba
Other
Supply and reserves are highly concentratedDRC accounts for c.90% of Co Chinese imports
- DRC accounts for 50% of output/reserves
- top five destinations account for 70-78% of production/reserves
- in total c.25mt in identified in total resources, most of which associated with sediment hosted
copper deposits in DRC and Zambia and nickel bearing laterites in Australia, Philippines, and
Cuba
- although, the largest cobalt resource remains untapped with more than 120mt identified in
resources in seabed nodules and crusts of the Atlantic, Indian and Pacific oceans
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Ex China 3/4s of refined production is split b/n five producers sourced as a by-product from copper/nickel projects
11.2
7.0
6.7
6.3
4.7
4.33.11.9
45.0
3.7
Freeport Cobalt
Sherritt (incl Ambatovy)
Glencore
Umicore
ERG (former ENRC)
Sumitomo
Norilsk Nickel
Vale
China
Other
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Cobalt is a by-product metal
57%
37%
6%
Nickel operations
Copper operations
Primary
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Refined cobalt production down in 2016 on suspensions at copper and nickel operations
5762
7982
77
8692
9894
0
20
40
60
80
100
120
2008 2009 2010 2011 2012 2013 2014 2015 2016
‘00
0t
Decline in 2016: suspension of Katanga (Glencore, copper) and Queensland Nickel (QNPL) due to low commodity prices
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• If you think Cobalt mining is bad, just look at how they refine Rare Earths in China
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