 |
Tight cobalt concs supply urges industry shakeup in China |
 |
|
|
back to the News
High cobalt concentrate prices and tighter supply conditions will cause a major shakeup in the cobalt processing industry in China, an industry expert speaking at Cobalt Development Institute's Cobalt Conference 2007 said Wednesday.
Li Xiaodong, vice president of Zhejiang Huayou Cobalt Nickel Materials, told the conference participants in Shanghai 140 cobalt plants making cobalt oxide, alloys, powder, metal and other products in China were under pressure to reform their strategies, as they face shortages of cobalt concentrate feedstock. Li Xiaodong's company processes cobalt.
China relies for its cobalt feedstock supply on imports, but imports from the Democratic Republic of Congo, the largest concentrate supplier to China, have fallen since 2005 as the DRC government started to discourage exports of cobalt concentrate to focus more on value-added products.
Of the 140 Chinese plants, 120 plants with capacities below 25,000 mt/year have been forced to operate at low utilization rates below 70% of capacity, Li said.
Li forecast that the industry would go through a consolidation in the coming two to three years which would result in just 20 main players. In addition, they will also be shifting their production bases to Africa. "African ores will be expensive with freight cost, so we expect moves to Africa, more investment in Africa to produce value-added products there," Li said.
Prices for cobalt concentrate with 8-10% cobalt content have recently risen to around $24/lb CIF China, more than double year-ago levels, several sources from the industry told Platts, suggesting that prices could easily hit $30/lb CIF, the current spot price of 99.8% cobalt cathode in Europe and the US.
"We sent several people to DRC, have worked with several local firms there to get 500-600 mt of concs per month," one source said, describing the supply tightness.
A source at one Chinese cobalt oxide producer also told Platts Chinese cobalt concentrate importers had been advised by the DRC government to build production plants in DRC, to support the government policy to focus more on value-added products. "This is a choice open to very few players that are in good financial condition," the source said. back to the News |
