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Cobalt in crisis

THE price of cobalt is forecast to slump with detrimental

consequences for new cobalt-related projects in WA.

Delegates to the ALTA nickel/cobalt 2000 conference, held in Perth recently, were told an oversupply of cobalt was due within two years.

Perth-based Argosy Minerals Inc analyst David Russell said that an agency should be set up to market cobalt in order to address the issue.

An oversupply could result in a long-term price drop to as low as US$2 per pound, he said.

A report by ABARE’s Outlook 2000 quoted a price of US$14.19/lb on 5 February 2000.

Mr Russell said this fall in price would have disastrous results for the nickel industry in WA which had written cobalt credits into its project budgets.

He said three nickel projects in WA did not come up to scratch in achieving their targets on commissioning and keeping to budget, which has worried financiers.

These concerns were reiterated by Canadian-based Inco Limited vice-president, engineering and technology, Gordon ‘Gord’ Bacon.

“The cobalt oversupply will hit the industry; there is no question about it,” Dr Bacon said.

“Cobalt prices are very dicey.”

In the ABARE report, Peter Seale of Resource Strategies Ltd, postulated that between 2005-10 the price of cobalt would fall to between US$6/lb and US$10/lb.

Unlike nickel, there is no terminal market for cobalt such as the London Metal Exchange, and no standard form in which it is marketed.

There has also been little transparency in the cobalt industry for many years.

This changed recently with resource leader WMC introducing its cobalt open sales system on the Internet to market and sell the metal.

Cobalt is, with a few exceptions, extracted as a byproduct of copper or nickel, with supplies for many years coming from the African copperbelt.

Australian cobalt production last year, sourced mostly from QNI, was 2,760 tonnes.

This is forecast to increase to 6,620t in 2000, rising steadily to 12,120t in 2003, according to the ABARE report.

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