Australian Mines LTD (AMSLF)

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Cobalt shortfall now much closer thanks to closure of the world’s largest mine. Experts believe the mothballing of Glencore’s Mutanda cobalt mine in the Democratic Republic of Congo will likely be the catalyst the market needs to spur prices higher.

Mutanda is the world’s largest cobalt mine with annual production of around 25,000 tonnes, or a fifth of global supply.

“This should be enough of a catalyst to see prices rise going forward, and although it is too soon to tell how significantly, it appears from early indications that they have already begun to react,” Caspar Rawles, senior analyst at Benchmark Mineral Intelligence, told Stockhead.

“However due to the uncertainty, people will look to start to secure material or be prepared to pay more for it and early indications are that prices are rising as a result,” he said.

“Furthermore, looking to 2020 and beyond, without the roughly 25,000 tonnes of cobalt from Mutanda the market will be moving into deficit far sooner than was expected.”

One ASX-listed cobalt player, meanwhile, says the premature closure of the Mutanda mine validates what many commentators have been saying for a long time about the instability of the DRC as a supplier of cobalt.

“These things are in the back of people’s minds anyway, so when you see these announcements from Glencore it just confirms that what people have been saying may actually be playing out,” Australian Mines managing director Benjamin Bell told Stockhead.

“It certainly helps us from a commodity pricing point of view.”
Australian Mines is advancing its Sconi nickel and cobalt mine in Queensland towards production.

The company recently locked in an agreement to sell all of the mine’s yearly nickel and cobalt production for at least seven years to South Korea’s SK Innovation at full market price.

The pair had previously negotiated a deal that would give SK a discount on Australian Mines’ nickel and cobalt if it injected $80.3m into the company by subscribing for 669m shares.

But SK decided not to go through with the investment and will have to buy the nickel and cobalt at full price.

https://stockhead.com.au/resources/cobalt-shortfall-now-much-closer-thanks-to-closure-of-the-worlds-largest-mine/