Cobalt has become a hot story on global commodity markets.
Prices for the metal, a key component of lithium-ion batteries, have been surging thanks to unprecedented demand from electrical car makers and concerns about future supply.
Tesla and pretty much all the major car makers including General Motors, Volkswagen and Toyota are moving into electric and hybrid cars.
The cobalt price has more than doubled since the end of August to $US50,750 a tonne on Wednesday, as this chart from the London Metals Exchange shows.
Investors are buying up physical cobalt in anticipation that shortages of the metal will spur prices to their highest levels since the 2008 financial crisis, Reuters reported last month.
Swiss-based Pala Investments, a fund focused on the mining sector, and Shanghai Chaos Investment, one of China’s largest commodities funds, bought cobalt last year, Reuters reported citing industry sources familiar with the matter said.
Politically risky Democratic Republic of Congo, and China hold a 60% share in cobalt mining and refining respectively and as such as developments in these two nations will be a major influence on prices, consultants CRU Group said in a note last year.
CRU forecasts a substantial shortfall in mined and refined material before 2020 unless additional capacity is bought online. As over 90% of cobalt is mined as a by-product of copper and nickel mining operations, falling investment in these metals may result in a strong increase in cobalt prices.
It also estimates electric car and plug-in hybrid vehicle sales could hit 4.4 million in 2021 and more than 6 million by 2025, from just 1.1 million last year.
That would mean a deficit in refined cobalt following seven years of overcapacity and oversupply, said CRU, which expects prices to increase onward into 2017 as global demand for refined cobalt is set to jump as supply tightens, CRU said.
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