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As a general rule,
the most successful man
in life is the man who
has the best information
A critical or strategic material is a commodity whose lack of availability during a national emergency would
seriously affect the economic,
industrial, and defensive
capability of a country.
The report
“Critical Raw Materials for the EU” listed
14 raw materials which they deemed
critical to the European
Union (EU): antimony, beryllium,
cobalt, fluorspar, gallium, germanium, graphite,
indium, magnesium, niobium, platinum group metals, rare earths, tantalum and tungsten.
The French
Bureau de Recherches Géologiques et Minières rates high tech metals
as critical, or not, based
on three criteria:
- Possibility (or not) of substitution
- Irreplaceable functionality
- Potential supply risks
Demand is
increasing for critical metals due to:
- Economic growth
of developing countries
- Emergence of new technologies and products
Access to raw materials at competitive prices has become essential to
the functioning of all industrialized
economies. As we move forward developing and developed countries will, with their:
- Massive population booms
- Infrastructure build
out and urbanization plans
- Modernization programs for existing,
tired and worn out
infrastructure
Continue to
place extraordinary demands
on our ability to access and distribute the planets natural resources.
Threats to access
and distribution of these commodities
could include:
- Political instability
of supplier countries
- The manipulation of supplies
- The competition
over supplies
- Attacks on supply
infrastructure
- Accidents and natural
disasters
- Climate change
Accessing a sustainable,
and secure, supply of raw materials is going to become
the number one priority
for all countries. Increasingly we
are going to see
countries ensuring their own industries have first rights
of access to internally produced commodities and they will look for such privileged access from other
countries.
Numerous countries are taking steps to safeguard their own supply by:
- Stopping or slowing
the export of natural resources
- Shutting down traditional
supply markets
- Buying companies
for their deposits
- Project finance tied to off take agreements
Many countries classify cobalt as a critical
or a strategic metal.
The US is the world's largest consumer of cobalt and the US also
considers cobalt a strategic
metal. The US has no domestic
production - the United States is 100% dependent on imports for its supply of primary cobalt - currently about 15% of U.S. cobalt consumption
is from recycled scrap, resulting in a net import reliance
of 85%.
Although cobalt is one of the 30 most abundant elements within the earth's crust it’s low concentration (.002%) means
it’s usually produced as a by-product -
cobalt is mainly obtained as a by-product of copper
and nickel mining activities.
Today 40% of the cobalt consumed in the world originated
as a by-product from copper production in the West African
country of the Democratic Republic
of Congo (DRC) - cobalt production in most other countries is a by-product of nickel mining.
The copper deposits in the Katanga
Province of the Democratic Republic
of the Congo are the top producers of cobalt and
the political situation in the Congo influences the
price of cobalt significantly.
The politically unstable Democratic Republic of Congo contains half the world’s cobalt supply and
represents the lion’s
share of anticipated
future cobalt supply – the DRC’s 2007 output was equal to the combined
production of cobalt by Canada, Australia and Zambia.
In a nine billion dollar joint venture
with the DRC China got
the rights to the vast copper and cobalt resources of
the North Kivu in exchange for providing
$6 billion worth of road construction, two hydroelectric dams, hospitals, schools and railway links to southern Africa, to Katanga and
to the Congo Atlantic port at Matadi. The other $3 billion is to be invested by China in development of new mining
areas. Approximately half
of known global cobalt reserves
are in the DRC, and close to 40%-50% of incremental
cobalt production, over the next five years, is anticipated
to emanate from the DRC.
At 19.7 percent of global supply Zambia is
the world’s second largest
producer of copper-cobalt.
According to a recently released report by the Zambian
Central Bank cobalt production rose to 2,236 tons in the first quarter of
2011 from 1,989 tons last year,
exports increased to 2,279 from
1,977.
China is extremely short of cobalt concentrates and needs to
import cobalt concentrates in large amounts every year. The leading global producers of refined cobalt are
China (39%), Finland (15%) and Canada (8%). China is a leading
supplier of cobalt imports to the United States.
The cobalt market is small
in comparison with other base metals. Consumers purchase cobalt through negotiated agreements, bids, and open markets from producers, traders and to a lesser
degree, government stockpiles and private
inventories.
Uses
Cobalt is a strategic and critical metal used in many diverse industrial and military
applications.
- Super alloys
- Renewable Energy Re-usable energy storage systems
- Wear resistant
alloys
- Magnets
- Binder Material
- Thermal spray coatings
- Orthopedics
- Life Science
- Catalyst in de-sulfurizing
crude oil and as a catalyst in hydrogenation,
oxidation, reduction,
and synthesis of hydrocarbons.
- Gas to liquid
technology (GLT)
- Other Uses - Drying
agents in paints, de-colorizers,
dyes, pigments, and oxidizers.
Promotes adherence
of enamel to steel,
and steel to rubber
in steel belted
radial tires
Conclusion
China seemingly has most
of the DRC’s production of cobalt locked up, that’s up to
40% of global mined cobalt.
Cobalt is classified as a
strategic/critical metal.
With the recent strong support for electric vehicles the use of cobalt in this
sector alone has led to a formidable demand for
the element and the US cannot
continue to depend on its
cobalt being supplied mostly from China.
There is no doubt in this author’s mind that cobalt’s
profile will continue growing
in the coming months and years.
Is cobalt on your radar screen?
If not maybe it should be.
Richard Mills
Aheadoftheherd.com
If you're
interested in learning more about the junior resource market please come and
visit Richard at www.aheadoftheherd.com. Membership is free, no credit card or personal
information is asked for.
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