At the current price, between 20-30% of global cobalt mine supply is at risk of disappearing in 2020.
This is according to Benedikt Sobotka, CEO of Eurasian Resources Group (ERG). According to Sobotka after a spectacular 2018 where prices averaged in excess of US$ 35 per pound, principally as a consequence of strong demand growth from the lithium-ion battery industry, Fastmarkets MB’s standard-grade/low assessment – the international benchmark price – fell throughout 2019 until early August.
“Since then, the industry benchmark price has gained by almost 30%. Some attribute this to multiple curtailment announcements among miners, both in the DRC and elsewhere. Yet, in reality, signs of imminent recovery in cobalt prices were evident by mid-July – when both Chinese domestic metal prices, and hydroxide payables, started to rise; and the reason was mining costs.
“Some of this will be replenished with ramp-ups at major industrial projects, but not enough to close the gap. Some may be supplied by existing stockpiles, but these are held in stable hands and will fall to critical levels over the course of 2020, explains Sobotka.
He adds that in order to regain lost supply in the short-term, a sustained price in excess of $15 per pound is needed. In the long-term, S20 per pound and above is required to attract much-needed capital to the industry.
With more than 18 million new energy vehicles forecast to be produced globally over the next three years, it is forecast that there will be an almost two-fold increase in cobalt demand by 2025.