Cobaltishittinghistoricallyhighpricesfuelledbytheautomobileindustry,whichneedstheraremetaltomakelightanddurableelectricbatteries.
Thepricepertonneofcobaltroseto$82,000ontheLondonMetalExchangeinmid-February,itshighestlevelsinceitbegantrackingthecommodityin2010,andhasalmosttripledinvaluesincethebeginningof2016.
However,therapidlygrowingdemandhasnotyetpeaked,accordingtoDartonCommodities,whichspecialisesinthesaleofcobalt.
"Electriccarscameofagein2017,withsalesrising51percent,"saidanalystsatMacquarie,notingthatthehaltingofstatesubsidiesforsalesinChinacouldslightlyslowthisgrowthin2018.
Intherestoftheworld,moreandmorecountriesareplanningtophaseoutpetrolanddieselcars,promptingmanufacturerstodevisestrategiestomeetthedemandforelectricvehicles.
InDecember,SwissmininggiantGlencoresaiditwasindiscussionwithVolkswagenandTeslatosupplythemwithcobalt,accordingtomanagingdirectorIvanGlasenberg,quotedbyBloomberg.
Whilethehigh-profileelectricvehiclemanufacturerTeslaremainsdiscreetaboutitsrawmaterialneeds,newsreportssaidthatVolkswagen'snegotiationswithcobaltproducershadbrokendown.
Inresponsetothedemand,Glencoreannouncedinlate2017thatitplannedtoproduceabout63,000tonnesofcobaltby2020,comparedwith27,000tonnesin2017.
Anotherreasonformarketinterestisthatcobaltislargelyproducedasaby-productofcopperandnickelmines.
Theamountofcobaltineverytonneoforeminedissosmallthatittakesahighconcentrationtomaketheactivityprofitable.
"Asaresult,theglobalprovenreservesofcobaltaredependentontheeconomicviabilityoftherelevantcopperandnickelmines,"cautionedanalystsatNatixis.
Inaddition,morethanhalfofcobaltminingproductioncamefromtheDemocraticRepublicofCongoin2017.
Thecountry,facedwithsoaringdemand,planstoincreaseitsmetaltaxfivefold,whichissendingshock-wavesthroughthesector.
SomebelievethedailypricesetbytheLMEmayhaveoverestimatedcobalt'spotential.
TheLMEpriceonlyreflectspartofthetruevalueofthemetal,sincecobaltexchangesarelargelyoutsidethepublicmarket.
Financialinvestors,seducedbythepotentialforelectricvehicles,mayhaveinducedamarketfever,arguedDartonCommodities.
2018AFP
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