As COVID-19 continues to spread worldwide, the pandemic is having an unprecedented impact on the global economy and commodity markets, including cobalt. With countries imposing prevention and control measures against the virus, a number of cobalt-producing operations have been temporarily closed for maintenance since March.

Roskill has so far recorded the closure of 21 operations as a result of the outbreak, including: Vale’s Voisey’s Bay and Glencore’s Sudbury in Canada; Ambatovy in Madagascar; Coral Bay and Taganito in the Philippines; CTT in Morocco. At this time, the loss of supply from these closures amounted to more than 1% of the total mine supply in 2019.

Roskill expects the cobalt market to face more severe supply disruption should the prevention and control measures be further extended on a global scale. The impact could be significant for Africa, a key cobalt producing region where the outbreak is still in its early stages.

Markets have already shown concern amid South Africa’s announcement of a five-week lockdown from late March, and following a 48-hour lockdown in the Democratic Republic of the Congo’s (DRC’s) Haut Katanga region because of positive tests for COVID-19.

According to a January 2020 report from the US Geological Survey (USGS), the DRC is the world’s leading source of mined cobalt, supplying approximately 70% of world cobalt mine production. With the exception of production in Morocco and artisanally mined cobalt in DRC, most cobalt is mined as a byproduct of copper or nickel.

China is the world’s leading producer of refined cobalt, most of which it produced from partially refined cobalt imported from DRC. China is the world’s leading consumer of cobalt, with more than 80% of its consumption being used by the rechargeable battery industry.

In a 2018 open-access paper assessing China’s domestic and foreign influence in the global cobalt supply chain, the USGS authors noted that:

The security of China’s foreign mine and intermediate cobalt supplies, therefore, is heavily dependent on stable production in the DRC and continuous access to maritime supply routes between Africa and China. —Gulley et al.

Haut Katanga and its neighboring Lualaba Province are home to many major cobalt operations such as Glencore’s Katanga, ERG’s RTR and Chemaf’s Etoile. Cobalt mined in these areas, and in other parts of the DRC, is shipped mostly to China typically via the port of Durban.

However, owing to the widespread closures in South Africa, most shipments are now having to be diverted to other neighboring ports such as Maputo in Mozambique or Dar es Salaam in Tanzania. Roskill understands this change in logistics has slowed the number of cobalt units able to be shipped, as thousands of trucks carrying cobalt hydroxide/concentrate are currently queuing at the DRC border for customs clearance.





Meanwhile, logistical restrictions and a decrease in the number of available trucks has also imposed challenges on the shipping of supplies essential for production (such as equipment and reagents) and their ability to reach mining operations. This could be particularly challenging for new projects, where some delays to construction and/or ramp up are likely if logistical restrictions persist or become stricter owing to the spread of the pandemic.

As the result of uncertainties surrounding both supply and demand, Roskill understands that cobalt refiners are cautiously buying feedstock with a preference towards purchasing at fixed prices and tolling to minimise future risks. Hydroxide stocks in China and other Asian ports will be sufficient to support capacity in the next month or so, but Roskill expects intermediate supply to become tight in Q3.

Roskill will update its Cobalt: Outlook to 2029 report, published in August 2019, in May. The update will include a detailed analysis of COVID-19 impacts on the cobalt market.

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