China is taking advantage of tumbling cobalt prices to build up its inventories of the metal used in electric-vehicle batteries and aerospace alloys.
The Chinese National Food and Strategic Reserves Administration, the government stockpiling body, has agreed to purchase about 5,000 tonnes of cobalt from three local refiners and a state-owned trader this week, people familiar with the matter said.
The volume is higher than the original plan to buy 2,000 tonnes, after additional offers from the suppliers prompted the state stockpiler to take more grades of the metal, said the people, who asked not to be identified because they’re not authorized to speak publicly.
Photo: AFP
The National Food and Strategic Reserves Administration did not reply to a faxed request for comment.
Global cobalt prices have tumbled more than 60 percent from May last year on rising output from the Democratic Republic of the Congo (DRC) and Indonesia.
There could be a global surplus of 30,000 tonnes of the metal this year, which might widen further next year, Rystad Energy said.
Chinese refiners, which dominate processing of cobalt, are heavily reliant on material that comes from DRC mines, although Indonesia is quickly emerging as an important source.
Surging violence in the eastern DRC could further destabilize the country as it prepares for elections in December, a group of experts from the UN warned last month.
On the demand side, the adoption of cheaper cobalt-free lithium iron phosphate batteries, has gathered momentum. Ethical concerns about cobalt production from DRC have also fueled the shift away from cobalt in cathode chemistry.
However, cobalt is still crucial in diverse applications from aerospace materials to magnets.
The last time China stocked up on cobalt was in 2020 when it bought 2,000 tonnes of the metal for its strategic commodity reserves, to counter supply disruptions in DRC due to COVID-19.
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