Investment bank UBS said on Tuesday that the shuttering of top cobalt producer Glencore’s Mutanda mine in Democratic Republic of Congo should trim an expected market surplus over 2019-2023, moving the risk versus reward for cobalt prices “firmly to the upside.”
* “We expect the cobalt price to increase around 60 percent over the next 18 months back to $20 a pound. We see further material upside in 2024-2025 when the market is set to move into a deficit” it said in a research note, acknowledging the possibility that supply from DRC could fill the gap.
* Cobalt prices peaked above $43 a pound in March 2018 before collapsing 72% to $11.80/lb in late July. Since Glencore’s announcement, prices have recovered to $14.30.
* UBS said it sees DRC politics as a key supply risk in the near and medium term given the country’s new prime minister and a new mining code.
* UBS’s satellite images show that development of two major privately owned cobalt projects, Mutoshi and Deziwa, are ramping up for production in H2 next year with Mutoshi slightly behind schedule.
* UBS forecasts electric car penetration to reach 17 pct or 17 million vehicles in 2025 and for cobalt demand to grow to 270,000 by then from 130,000 currently.