Cobalt: Glencore reports US$350M hit as cobalt prices fall

In a trading update last week, the cobalt producer and trader noted that based on its “carried internally sourced priced cobalt exposure of 10.3kt” and “a significant decline in hydroxide payabilities” it expects to report related EBIT losses within its Marketing segment of approximately US$350M during H1 2019.

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The announcement sheds some light on Katanga’s unsold tonnages. Like many producers, the company has been hit by falling prices and payables. In 2019, Katanga launched a comprehensive business review targeting mining efficiencies and process recovery improvements, as well as enhancements to product quality realisations and overhead reductions. As a result, guidance was lowered to 26kt Co. New guidance and the results of this review are expected on August 7th. In H1 2019, Katanga produced 6.1kt Co in hydroxide.

The news comes after a challenging 18 months for Glencore’s African copper business. Last year saw a court case over unpaid royalties with Israeli businessman Dan Gertler, the discovery of high uranium levels at Katanga, and the introduction of new 10% mining royalties on cobalt in the DRC. Earlier this month, more than 40 artisanal miners perished near to the KOV open pit mine, operated by Kamoto Copper Company, a subsidiary of Glencore.

With the market for hydroxide oversupplied, payables now at 60%, and standard grade prices now at US$12/lb, the market will await news of the Katanga review eagerly in early August.

Roskill’s NEW Cobalt: Outlook to 2029 report will be published in July 2019 and provides data on global cobalt refined production and emerging industry trends. Click here to download the brochure and sample pages or to access further information.

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This article was written by Jack Bedder. Please get in touch below if you wish to discuss further:

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