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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

-02

Jan

-03

Jan

-04

Jan

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Jan

-06

Jan

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Jan

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Jan

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Jan

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-11

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Jan

-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