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Standard & Poor's says cobalt supply fears remain high

S&P expects mined cobalt supply to increase at a CAGR of 12% to 2021.

pie chart showing 2017 mined cobalt production by region (%)
S&P 2017 mined cobalt production by region (%)

Standard & Poor's believes risks remain high around the supply of ethically sourced cobalt from the world’s largest producer, Democratic Republic of Congo (DRC).

Although the DRC government claims that child labour has been eliminated from copper-cobalt mining, end-use manufacturers are putting in place assurances to guarantee that their cobalt is ethically sourced.

This includes attempts to acquire cobalt directly from a miner and utilising blockchain technology to provide a secure chain of custody record.

DRC produces 60% of the world’s cobalt

Supply risks are associated with the dominance of the DRC in cobalt supply given it is currently the source for 60% of global supply.

S&P believes these risks must be managed as there is no region that can match The DRC's output.

S&P also expects mined cobalt supply to increase at a CAGR of 12% to 2021 with the majority of the growth from formal mining operations in the DRC.

Cobalt production dropped in 2017

Global mined cobalt production showed a slight drop in 2017 to 115,071 tonnes from 116,272 tonnes in 2016.

The majority of cobalt supply is sourced from copper-cobalt operations in the DRC and the bulk of the remainder is attributed to nickel-cobalt operations worldwide.

ASX cobalt juniors have a role to play

Although supply risks are starting to be realised, market commentators agree that peak cobalt isn't on the horizon.

This means that developing ethical suppliers of cobalt both inside and outside the DRC have an important role to play in future global supply.

ASX-listed companies developing cobalt projects include:

READ: Cape Lambert Resources engineering study supports low-cost cobalt operation

Cape Lambert Resources Ltd (ASX:CFE) is developing the Kipushi Cobalt-Copper Tailings Project in the DRC, which it has a 50% share in.

The company recently completed an engineering study to build a leaching plant to process existing tailings.

READ: Cobalt Blue Holdings’ Board confident of funding next stages of world-class cobalt project

Cobalt Blue Holdings Ltd (ASX:COB) is developing its Thackaringa Cobalt Project near Broken Hill in New South Wales.

A pre-feasibility study (PFS) released in early July 2018 estimated a pre-tax net present value (NPV) for the project of $792 million.

Cobalt Blue is earning into the project through a four-stage farm-in from Broken Hill Prospecting Ltd (ASX:BPL).

ASX juniors having cobalt exploration success

Marquee Resources Ltd (ASX:MQR)

READ: Marquee Resources’ drilling confirms the presence of high-grade cobalt at Werner Lake

Latin Resources Ltd (ASX:LRS)

READ: Latin Resources well-funded to advance lithium, cobalt strategy in Argentina

Accelerate Resources Ltd (ASX:AX8)

READ: Accelerate Resources intersects high-grade cobalt at Mount Read project

Corazon Mining Ltd (ASX:CZN)

READ: Corazon Mining drills new cobalt, copper and gold targets at Mt Gilmore

White Cliff Minerals Ltd (ASX:WCN)

READ: White Cliff Minerals drills out more cobalt, nickel and copper at Coglia Well

Prospect Resources Ltd (ASX:PSC)

READ: Prospect Resources intends to purchase DRC property prospective for lithium and cobalt

Australian Vanadium Ltd (ASX:AVL)

READ: Australian Vanadium updates vanadium JORC estimate to include cobalt, nickel and copper

Castillo Copper Ltd (ASX:CCZ)

READ: Castillo Copper expedites cobalt exploration at Broken Hill project

Havilah Resources Ltd (ASX:HAV)

READ: Havilah Resources sampling confirms strong cobalt results at Mutooroo

Rimfire Pacific Mining NL (ASX:RIM)

READ: Rimfire Pacific Mining NL’s drilling confirms cobalt-nickel potential at Tout East

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