| August 26, 2010 Cobalt Deposit Solidifies Idaho's Place on Minerals Map Publisher: The New York Times Author: Phil Taylor | |
| Cobalt Deposit Solidifies Idaho's Place on Minerals Map SALMON, Idaho -- On a remote, forested plateau deep inside the Salmon-Challis National Forest, a Canadian mining firm is hoping to revive domestic production of cobalt, a mineral deemed crucial to post-World War II national security but whose production has since virtually disappeared from American soil. By this time next year, the Idaho Cobalt Project plans to unearth about 800 tons of ore a day from beneath these rugged mountains about 40 miles west of Salmon to be used in the production of hybrid vehicle batteries and industrial products ranging from jet engines to prosthetic hips. But unlike the scores of miners who rushed to this state in the 19th century in search of precious minerals like gold, silver and molybdenum -- leaving behind a toxic legacy of polluted streams and metal-laden tailings -- the developers of this mine say their project will leave the Salmon River watershed in better condition than they found it. "The wastewater will be better than a bottle of San Pellegrino," Mari-Ann Green, CEO of Formation Capital Corp., said in an interview. The firm plans to treat its wastewater -- up to 150 gallons per minute -- to drinking water standards or better and has multiple post-mining plans to prevent the drainage of acid runoff or heavy metals into nearby Bucktail Creek. Tailings, meanwhile, will be dried and stacked high atop a plateau and lined and capped with rubber and clay to prevent exposure to rainwater that could carry contaminants into surrounding valleys. "We're kayakers, we fish in the river, we camp in the woods," said Green, who noted the firm is negotiating a multimillion-dollar bonding agreement with the Forest Service to ensure protections are upheld. "That's our lifestyle. The last thing we want to do is spoil such a pristine resource." That promise, however, initially rang hollow for environmentalists who pointed to the mining industry's environmental record in the West: hundreds of thousands of abandoned mines that have degraded up to 40 percent of the region's headwater streams, according to U.S. EPA. Opponents appealed the mine's first federal permits in 2008, demanding the project meet a more stringent arsenic standard, comply with a more rigorous copper and mercury reduction plan, and conduct more water quality monitoring. By the end of 2008, Formation Capital had modified its operating plan to address those concerns, and in a rare move, the Idaho Conservation League, Boulder-White Clouds Council and Earthworks agreed not to challenge the mine's subsequent federal permits. Partnering with ICL and other conservation groups, including Trout Unlimited and the Nature Conservancy, Formation last year donated more than $150,000 for projects to improve the Salmon River watershed, a program it said it intends to fund annually throughout the life of the mine. "From a conservation perspective, we were able to find a net conservation benefit by working with the mining company instead of opposing them," said John Robison, public lands director for ICL. "We feel it raises the bar on mining in Idaho and really the West in general." The $138 million project cleared its final federal permitting hurdle last December and workers have cleared timber off the site in preparation for construction of a water treatment plant, waste rock facility, and mill. Based on current cobalt prices, the mine stands to generate roughly $34 million a year over the project's 10-year lifetime, creating nearly 150 jobs for Salmon and the surrounding communities. Filling a void The Idaho Cobalt Project, one of hundreds of mining proposals in various stages of exploration, permitting or production in the West, would be the first new U.S. cobalt mine in decades. Demand for mineral surged in the late 1990s, as the material became a critical component of lithium-ion batteries used in small electronics and the nickel metal hydride batteries of the Toyota Prius. One-fourth of the world's cobalt supply goes into batteries, with much of the rest going into superalloys for use in jet engines and natural gas-powered turbines. A small portion is used in the catalysts that help remove sulfur from petroleum fuel. Combined with the rare earth samarium, cobalt is also a critical component in permanent magnets used in battlefield tank navigation systems. Crucially, the United States consumes 60 percent of the world's high-purity cobalt but produces virtually none of the mineral at home. Forty percent of world supply comes from Africa, with a substantial remainder coming from Russia, Canada and Australia, according to the U.S. Geological Survey. While cobalt is not expected to be used extensively in the next wave of hybrid-electric vehicle batteries, a report this summer by the European Union listed cobalt among 14 "critical" raw materials due to its risks for supply disruptions and its integral role in Western economies. "It's a precarious position for the U.S. to be in," said Green. At full production, the Idaho Cobalt Project will produce roughly 1,500 tons annually of high-purity cobalt over at least a decade, or roughly 3.3 percent of world cobalt supply. At current consumption rates, the mine's output should meet roughly 15 percent of North American demand. Project officials in May announced they had raised $10 million toward construction of the mine. Additionally, about $15 million of heavy equipment has been purchased and is warehoused in Salmon. Green said the firm would be exploring a range of options to raise additional capital, including tax-free bonds from the American Recovery and Reinvestment Act of 2009 that could be issued by the Lemhi County Industrial Development Corp. Drilling samples taken this month will also help determine whether the deposit contains economically mineable concentrations of heavy rare earth elements known to occur on the property. Such minerals are considered integral to a host of low-carbon and energy efficient technologies, but current production is centered almost solely in China (Land Letter, July 22). 'An industrial sacrifice zone' While the Idaho Cobalt Project represents a renewed effort to retrieve "green minerals" from domestic sources, it is but one of thousands of mining claims being made on Idaho public lands, where the hardrock mining industry has struggled to overcome a history of poor environmental management. The Bureau of Land Management, which controls one-fourth of the state's land mass, has seen new mining claims rise by an average of 25 percent annually since 2001, growing to more than 18,000 claims in 2010. New proposals include a draft plan to drill hundreds of exploratory holes for molybdenum in the Boise National Forest in southwest Idaho and a proposal last month to expand the Thompson Creek molybdenum mine near Challis. Such projects promise new jobs and a steady tax base for rural Idaho communities, but the industry's historical operations have made some wary even of 21st century mines like the Idaho Cobalt Project. The Grouse Creek gold and silver mine, located south of the Frank Church-River of No Return Wilderness in central Idaho, promised a state-of-the-art facility in 1994, but operations shut down after three years and the Forest Service later ordered an emergency drawdown of the mine's tailings impoundment to protect federally designated critical salmon habitat. In the Coeur d'Alene River Basin in northern Idaho, arsenic, lead, cadmium and other heavy metals from former silver mines and smelting operations have poisoned former employees and killed off aquatic life in streams and rivers and could cost an estimated $1.3 billion over the next 50 to 90 years to clean up under a recent EPA plan. The Panther Creek watershed has also weathered environmental insults, as evidenced by the Blackbird Mine, which includes an unreclaimed 12-acre open pit hollowed from a mountainside adjacent to the Idaho Cobalt Project and several miles of underground mine works. "The Blackbird Mine is basically a study in what not to do," said Robison of the Idaho Conservation League. Blackbird was first discovered in the 19th century and was subsidized in part by the U.S. government to supply a growing Cold War mineral stockpile. It was a strategic center of cobalt and copper production until operations shut down in the early 1980s. The surface and underground mine was declared a Superfund site in the 1990s after heavy metals, including arsenic, cobalt, copper, manganese, nickel and zinc, were released into the surrounding creeks along with acid mine drainage and contaminated runoff. Blackbird Creek, bereft of the steelhead and Chinook salmon that once called it home, has taken on a rust-red hue as it flows from the mine site toward Panther on its way to the Salmon. Waste rock piles up to 2 million cubic yards in size are scattered along several miles of Meadow and Blackbird creeks, parts of which are now capped over with an impermeable layer of clay. Rainwater is rerouted above and around a tailings dam 150 feet high and two football fields wide. Water cascades down an artificial concrete ravine next to the dam, but also seeps through leaks near the bottom of the impoundment. "You have rainwater that is actually being intercepted and conducted off-site," Robison said. "This is considered a success, our work is done, but I say, 'Wait a minute, guys, that's not quite it.' "It's basically, if you will, an industrial sacrifice zone," he added. Similar stories are playing out across the West, according to EPA's Abandoned Mine Land Team, which estimated the cost of remediating mine sites on the National Priorities List in the United States to be on the order of $20 billion. Blackbird, and its continuing impact on regional waterways, was one reason ICL decided not to challenge the Idaho Cobalt Project, Robison said. It also helped that the project is largely underground and would disturb less than 200 acres of forest, he added. The Clear Creek wildfire a decade ago swept through a 200,000-acre swath of the Salmon-Challis, charring any habitat that could have been inhabited by lynx, gray wolves or grizzly bears. Raising the bar Water contamination has long been a byproduct of mining practices that prioritized convenient disposal of waste rock without considering the impacts such dumping would have on the environment, said Preston Rufe, environmental manager at the Idaho Cobalt Project. Much like conventional waste management, mining seeks to separate valuable commodities and dispose of relatively useless stock. "The purpose was to get rid of it as fast and easily as possible by dumping it here or there or wherever it was easy to do it," said Rufe, "not realizing that that stuff still has trace sulfide mineralization in it, which turns acidic with water and oxygen." None of this could happen at the Idaho Cobalt Project, which conducted exhaustive computer modeling and is implementing multiple redundant mitigation steps to prevent similar impacts, Rufe said. In contrast to historic mines that were built horizontally into a mountainside to facilitate easy transport of ore carts, the Idaho mine will decline gradually into the mountain to prevent water from flowing out of the portal. Half of the project's tailings will be placed back into the mine upon reclamation and fortified with an acid-neutralizing cement, Rufe said. The tunnels will then be allowed to re-flood, eliminating most of the oxygen needed to yield acid. "We did a lot of geochemical testing on the rock samples we extracted during the exploration process," Rufe said, and found that roughly 80 percent of the ore has no acid-producing potential. The firm also studied multiple years of meteorological data to determine how much water could be expected to percolate through the underground workings after the mine has closed and what impact a massive flood could have on the waste rock pile and groundwater. At worst, the mine could produce elevated levels of cobalt or copper in the groundwater for between two and five years after closure, Preston said. But the chances of that happening are very slim. If it does, the firm has installed a series of monitoring wells about halfway between the mine shaft and Bucktail Creek downhill from the mine. If contamination is detected, groundwater capture wells placed further down the hill would intercept the polluted water and redirect it to a treatment plant for discharge into another creek, Rufe said. "Honestly, I don't think we'll ever have to turn this on," Rufe said while sketching the pump-back system on a dry erase board in his office in Salmon. "But it's nice to have it there and know that if nothing else works -- the decline, the flooding, the alkaline amendment -- we have this in place." With secured financing, the firm should have plenty of revenue to pay for the treatment in the case of unexpected contamination. Production is expected to cost less than $8 a pound, and cobalt currently sells for just under $20 a pound. Even so, an estimated $44 million reclamation bond must be submitted before the mine is excavated below the water table, according to the Forest Service's January 2009 record of decision. A Forest Service spokesman said officials were unavailable to discuss final bonding negotiations due to a wildfire burning in the southern part of the forest near Stanley, but Rufe said the bond would be enough to ensure water treatment in perpetuity, or about 100 years, if necessary. Expect the unexpected Yet despite extensive computer modeling and exhaustive ore sampling, there are always unknowns involved in the construction of a mine, said Tom Myers, a Reno, Nev.-based hydrologist who is a consultant to county commissioners and conservation groups. "You're effectively changing the geology that nature would take thousands of years to change on its own," Myers said. While not familiar with the Idaho Cobalt Project, Myers said he was impressed that the firm was investing in monitoring and pump-back wells to protect the Salmon River drainage. But he cautioned that pre-mining studies to determine the geophysical characteristics of rocks often draw from too small a sample size, leading to flawed projections of how much acid a reclaimed mine could produce. Formation Capital officials said they conducted geochemical analyses on 136 rock samples from 16 cores drilled across the mine site at approximately 300-foot intervals. Myers added that at least 30 years of groundwater quality monitoring is typically needed to ensure acid-producing rocks do not outlast the buffering chemicals needed to neutralize them. "You could be monitoring for 20 years and that's when the buffer runs out," he said. But Rufe said Formation's extensive modeling efforts have increased confidence "that this flush of metals will only last, at most, a couple of years. And then it's done. The reaction cannot keep happening." "But it's not likely to happen," he added. "All the scientists agree that it's not likely to happen." Copyright 2010 E&E Publishing. All Rights Reserved. For more news on energy and the environment, visit www.greenwire.com. Greenwire is published by Environment & Energy Publishing. -END- | |
| August 23, 2010 LME reports encouraging start to cobalt and molybdenum trading Publisher: hedgeweek.com Author: Emily Perryman | |
| Cobalt and molybdenum have made an encouraging start to trading on the London Metal Exchange with volumes, liquidity and open interest building well since the launch on 22 February this year. To date, 4,047 lots of cobalt have traded (equivalent to 4,047 tonnes/USD161m). Molybdenum trading has seen 321 lots traded (equivalent to 1,926 tonnes/USD69m). At the close of 19 August, market open interest -- which is published by the exchange two days in arrears -- in cobalt had grown to 406 lots (406 tonnes), while open interest in molybdenum stood at 41 lots (246 tonnes). Nine cobalt brands have been registered, including Vale Inco, Norilsk and Votorantim, while seven molybdenum brands are registered, including Molymet, Molymex and China Molybdenum. Chris Evans, head of business development at the London Metal Exchange, says: "This has been a very promising start for minor metals trading on the LME. The development of liquidity takes time and this first six months sets very good foundations to engage more brands, build the warehouse network and attract more users to the market looking for price transparency, risk management and the benefits of trading cleared contracts." -END- | |
| August 10, 2010 UPDATE 1-Illegal miners overrun Freeport's Congo mine Publisher: Reuters Author: Katrina Manson | |
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* Truck backlog delays exports but road now reopened * Site calm, company says no impact on production (Adds Freeport comment, paragraphs 2-4)
KINSHASA, Aug 10 (Reuters) - Illegal miners in Democratic Republic of Congo burned trucks and stole copper from the $2 billion Tenke Fungurume (TFM) mine in a dispute with U.S.-based Freeport-McMoRan Copper & Gold Inc (FCX.N), a provincial minister said. A company spokesman in New Orleans confirmed the incident occurred on Monday but said it had no impact on operations at the mine, which produces copper and cobalt. "Yesterday, a group of illegal miners committed acts of aggression against the TFM/Fungurume community," the spokesman told Reuters in New York. "No TFM employees were hurt, but several policemen received minor injuries." Operations were not affected by the action and there were no more incidents on Tuesday, the spokesman said. Illegal mining is widespread throughout the mineral-rich country as close to 1 million individuals working on their own dig land that is in many cases privately owned, pitting them against foreign-owned companies and adding to investor woes in Congo's difficult business climate. "On Monday illegal miners squatting on Tenke Fungurume blocked the route, vandalized their offices, stole their computers and burned three trucks, looting the copper cathodes in one of them," provincial Interior Minister Jean-Marie Dikanga told Reuters on Tuesday. Dikanga said the trouble started after police stopped two trucks filled with material mined by illegal diggers that were leaving the site of the Tenke Fungurume copper and cobalt mine in the southern Katanga province. "They were expecting jobs, but they didn't get them, so now they have decided to go to war against the company," Georges Bukundu, head of the local branch of NGO Southern African Resource Watch, told Reuters. "It was a massive riot, and there is now a big backlog of trucks carrying minerals from all the mines nearby since that road is the artery for all of them on the route out (to Zambia)," said a security analyst who did not want to be named. More than 120 police were sent to calm the mob of about 2,000 protesting miners, of whom 32 have been arrested, said Dikanga. He said the main road had reopened. "We want to give a strong signal to business that we are backing them," added Dikanga. Congo is rated 182 out of 183 countries for doing business by the World Bank. Phoenix, Arizona-based Freeport is in discussions over details of its contract with the Kinshasa government, which is in the process of reviewing all mining contracts in the central African nation. Gold companies including Banro (BAA.TO), AngloGold Ashanti (ANGJ.J) and Randgold Resources (RRS.L), all of which have industrial mines under development in the east of the country, also face regular incursions from illegal miners. (Additional reporting by Steve James in New York; Editing by Richard Valdmanis, Jane Baird and Steve Orlofsky) -END- | |
| July 30, 2010 Formation eyes rare earths at Idaho Cobalt Project Publisher: Metal Pages | |
| LONDON (Metal-Pages) 29-Jul-10. Formation Metals has started a new drilling programme to determine if its cobalt project in Idaho can also yield rare earths. The Canadian company which this year finished mine construction at the Idaho Cobalt Project said its US subsidiary, Formation Capital Corp which runs the project has launched a 5,000 foot diamond drill programme in a previously untested area on the project. The main purpose of the drilling is to provide information needed to optimise mine design and production plans with the primary goal of maximizing ore production as early in mine life as possible, he company said. However it will also provide material for initial metallurgical test work to help determine whether extracting the heavy rare earth elements (REEs) known to occur on the property would be economically viable. Underground cobalt mining, once it starts, will also yield material for testing. Rare earths and gold, known to be present in the orebody, are not included in the bankable feasibility study for the project. "The [diamond drill] program is exciting for us as we can now obtain the data needed to optimize the mine design", commented Bill Scales, President of Formation Capital Corporation, U.S. He continued, "Mine design optimization, along with new information on the REE's, could have a positive impact on the overall economics of the project." END | |
| July 29, 2010 Idaho Cobalt Project seeks Lemhi County financial support Publisher: Recorder Herald Author: Leslie Shumate | |
Note: The following is an excerpt of a larger article entitled "Airport gets upgrade grant, [Idaho] Cobalt [Project] seeks county [financial] support", that appeared in the Salmon, Idaho, Recorder Herald newspaper dated July 29, 2010. The article covered matters regarding the updating of the Lemhi County Commissioners on various issues such as airport upgrades and the sale of tax exempt bonds as a means of raising funds for the Idaho Cobalt Project.
Thursday, July 29, 2010 -- Salmon, Idaho, [Formation Capital Corporation, U.S.'s Controller] Jason Smith and [Company] President Bill Scales updated the [Lemhi County] Commissioners on the Idaho Cobalt Project. Smith thanked the County for its support and for putting a local Industrial Development Corporation (IDC) in place which gives Formation an option of utilizing the corporation for the sale of tax exempt bonds. [See Formation Metals news release dated Feb 27, 2009]. Smith said Formation has all the required permits and all the agreements are in place. That leaves the matter of financing the mining project. He said the American Recovery Reinvestment Act of 2009 contained two types of bonds. One is a Recovery Zone Economic Development bond and the other is a Recovery Zone Facility bond. The latter is of interest to Formation Capital. Smith said the bonds could be handled through the County's IDC if the County were officially designated as a Recovery Zone. The company requested that designation be made and the Commissioners confirmed the County would not be obligated in any way and that there is no liability or risk. The Recovery Zone designation was instated by Resolution 10-12 for the purpose of utilizing the American Recovery Reinvestment Act of 2009. | |
| June 30, 2010 Formation Metals Explores Funding Options For The Idaho Cobalt Project Publisher: minesite.com Author: Daina Lawrence | |
| It's been 13 years in the making, but Formation Metals is gradually getting closer and closer to going into production at its Idaho Cobalt Project. First things first, though, the company needs money to get it built. "We have been exploring all the avenues, options and alternatives we have for mine finance since last summer", says Mari-Ann Green, Formation's chief executive. At the moment, it looks like an off-take deal, also known as a streaming deal, is favourite, although she's quick to stress that there are no [official] negotiations [we can announce in a news release] happening at this time. What would be on offer, though, would be a percentage of the byproduct from Formation's cobalt property, namely of the copper and/or gold, in return for a lump sum up front. "It's good in these types of markets because then you don't have to talk about your market cap," says Mari-Ann. Mari-Ann reckons the signing of such an off-take agreement will be a sizeable first step in the right direction. Following that, the company will then raise commercial debt, and then finally raise funds through issuing new equity. With C$10 million already in the bank, thanks to a financing deal completed in May, Mari-Ann appears anxious to get the ball rolling on the rest of the finance for the Idaho project. That C$10 million is referred to in company documentation as an "interim" raising, and has allowed the company to get on with phase one of construction. The overall capital requirement for full construction at Idaho has been put at around C$138 million, so there's a little way to go yet. But there's no doubt that there's value on offer. According to a technical report from Samuel Engineering, based on Formation's own feasibility study, the Idaho Cobalt Project has an NPV of just over US$87 million, and should deliver average net cash flow around US$33 million over a ten year life, on the basis of a projected cobalt price of US$22.52 per pound, which is not far off where the metal's trading now. Idaho currently boasts a diluted, proven and probable reserve of 2.636 million tons at 0.559% cobalt, 0.596% copper and 0.014 ounces per ton gold using a 0.2% cobalt cut-off. There's also 1.12 million tons inferred at 0.585% cobalt, 0.794% copper, and 0.017 ounces of gold per ton. That all adds up to contained metal of 42.6 million pounds of cobalt, 49.1 million pounds of copper and 56,000 ounces of gold. It's on those numbers that the projected mine life currently stands at 10-plus years. But Mari-Ann says she is confident there is room to expand well beyond the estimated lifespan, especially since project is open along strike and at depth. What's referred to in Formation's marketing literature as a "district potential" of 50 million tons certainly sounds mouth watering enough, but let's wait and see. As things stand, the mine already has plenty of strengths. It will be capable of producing a greater than 99.8% high purity cobalt metal, with specifications suitable for critical applications in the aerospace sector such as use in the manufacture of jet aircraft engines, as well as in the next generation of lithium-cobalt-ion rechargeable batteries that will be used in electric and hybrid-electric vehicles. High purity cobalt metal sells at a premium over the 99.3% purity cobalt metal, which has been traded on the London Metals Exchange since February 22nd of this year, in spot, three, and fifteen month contracts. Located in Salmon, Idaho, Formation's project has the advantage of being close to its US customers. That, and the fact that the company's hydrometallurgical complex will be close by in Big Creek, makes Formation Metals confident it can keep its costs down compared to other North American companies who ship their product to refining plants in Europe and beyond. Plus, this beautiful, rustic town is easy to recruit in, according to Mari-Ann. The majority of the project team is already assembled and ready to start on production whenever the financing is complete. -END- | |
| June 17, 2010 EU Foresees Shortages of 14 Critical Minerals Publisher: ResourceInvestor.com Author: Philip Burgert - Managing Editor | |
| CHICAGO -- The European Commission has identified 14 mineral raw materials, including several metals and metal groups, which have high supply risks and could face shortages resulting from limited production sources and high demand. An expert group assembled by the Brussels-based commission studied 41 minerals and metals groups to compile the "critical" supply list. Minerals on the critical list are antimony, beryllium, cobalt, fluorspar, gallium, germanium, graphite, indium, magnesium, niobium (also known as columbium), platinum group metals (PGMs), rare earths, tantalum and tungsten. The experts concluded that demand might more than triple for some of the minerals between 2006 and 2030 and released forecasts of demand growth from emerging technologies for nine of the minerals as well as silver and copper. They said the growing demand for raw materials is driven both by the growth of developing economies and new emerging technologies. The high supply risk was described as mainly due to the fact that a high share of the worldwide production mainly comes from a handful of countries including China for antimony, fluorspar, gallium, germanium, graphite, indium, magnesium, rare earths and tungsten; Russia for PGMs; the Democratic Republic of Congo for cobalt and tantalum; and Brazil for niobium and tantalum.  Note: Red DRC emphasis added by Company
The production concentration is, in many cases, compounded by low substitutability and low recycling rates, the experts said. Many emerging economies are pursuing industrial development strategies by means of trade, taxation and investment instruments aimed at reservation of their resource base for their exclusive use, they said. Technological change is also influencing the importance of raw materials and is expected to drastically increase demand for certain raw materials, the experts concluded. The main emerging technologies driving critical raw materials supplies are antimony tin oxide and micro capacitors for antimony; lithium-ion batteries and synthetic fuels for cobalt; thin layer photovoltaics, integrated circuits and white light emitting diodes for gallium; fiber optic cable for and infrared optical technologies for germanium; displays and thin layer photovoltaics for indium; fuel cells and catalysts for platinum PGMs; catalysts and seawater desalination for palladium PGMs; micro capacitors and ferroalloys for niobium; permanent magnets and laser technology for neodymium (rare earths); and micro capacitors and medical technology for tantalum. The experts recommended a series of policy actions to improve access to primary resources and make recycling more efficient as well as encouraging substitution of raw materials and improving overall material efficiency. An update of the list every five years and enlargement of criticality assessment was also recommended. The list was established in a 2008 European Union raw materials initiative and is to be used by the commission to draft a forthcoming statement on strategies to ensure access to raw material which is scheduled for publication this fall. "Today's report provides very valuable input for our efforts to ensure that access to raw materials for enterprises will not be hampered," Antonio Tajani, the commission's vice president for industry and entrepreneurship, said in presenting the results at a conference in Madrid. "We need fair play on external markets, a good framework to foster sustainable raw materials supply from EU sources as well as improved resource efficiency and more use of recycling," Tajani added. "It is our aim to make sure that Europe's industry will be able to continue to play a leading role in new technologies and innovation and we have to ensure that we have the necessary elements to do so." -END- | |
| June 11, 2010 A breakthrough in China, another blow for Sudbury Publisher: Globe & Mail Update Author: Andy Hoffman | |
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No longer just a low-wage workshop, China is reshaping world markets through innovation - including a revolutionary alloy that takes aim at Canada's nickel belt
The Globe and Mail: Making nickel pig iron at a plant in in Huaibei, China. Cost advantage The heart of Mr. Li's burgeoning metals empire is hardly a high-tech showpiece. The plant where Jiangsu Mingzhu produces NPI in the city of Huaibei in China's Anhui province belches smoke. A stray dog picks at a pile of rubbish, while a worker sits atop a hill of nickel ore, spraying it down with a hose to keep it from turning to dust and blowing away in the wind. The NPI plant sits right beside its electricity source - a coal-fired plant. "We spend 160,000 yuan [about $24,300 Canadian] on electricity per day," boasts Wu Jinduo, the plant's sales and supply director. Workers begin the NPI process by mixing together three ingredients - coking coal, nickel ore from Indonesia, and a mix of gravel and sand known as aggregate or flux. The mix goes into one of the factory's three furnaces, where it's blasted with high heat, reduced and concentrated. The molten material is then poured into moulds to make bars of nickel pig iron. Workers use long metal rakes to scrape the remnants of the metal liquid from the container. The process is dirty, dangerous and rudimentary. But it contains some vital advantages. Foremost among those advantages is the factory's ability to capitalize on several low-cost materials - cheap power, a small amount of coking coal, and, most important, low-grade Indonesian ore. The ore contains less than 2 per cent nickel, making it unsuitable for traditional nickel production. But it is nearly half iron. Thanks to that high iron content, the NPI that emerges from this plant contains a generous amount of nickel - 10 to 12 per cent - mixed into a base that is nearly all iron. For China's thousands of stainless steel producers, the combination of nickel and iron is hugely attractive. They pay NPI producers the same price (or slightly less) as they would pay traditional producers to get the nickel content they need to make stainless steel. They get a bonus of iron - another ingredient needed to make steel - for free. Exactly who invented the NPI process is unknown. Industry executives say Chinese producers took their first faltering steps with the product around 2005. The early batches of NPI were prohibitively expensive and low grade, containing only about 4 per cent nickel or less. The world's big nickel producers took little note. Development went into fast forward when nickel prices spiked in 2007 and China's stainless steel producers were forced to look for alternatives. As nickel soared to $24 (U.S.) a pound from $10, the economics of NPI suddenly looked more attractive. Many Chinese smelters along the country's east coast switched from producing other metals to making NPI, a shift that led to major improvements in smelting techniques. In Xuzhou, Mr. Li's company was among the most important innovators. Mr. Li's father had founded Jiangsu in the 1980s to produce metal alloys, but by 2006, the company had moved into producing NPI. It soon figured out a way to enhance the quality of the material. "We were the first enterprise in China to smelt pig iron by electric furnace," Mr. Li says. By switching from blast furnaces to electric furnaces, Chinese NPI producers can now make material containing between 8 and 15 per cent nickel. Similar in quality to ferronickel produced by nickel giants such as Vale, the Chinese NPI production can be used to make high-end "300 Series" stainless steel. By 2009, the top NPI producers had reduced production costs to between $7 and $8 a pound, according to analysts. By December of last year, approximately 70 Chinese firms were producing NPI, says Celia Wang, an analyst at Shanghai Metals Market, a unit of research firm CBI China, and an expert in the NPI industry. Ms. Wang estimates that NPI production hit 44,000 tonnes of nickel in the first quarter and she expects output to break records this year, reaching between 160,000 tonnes and 180,000 tonnes of nickel -production that otherwise would have come from traditional refined nickel miners. China is expected to gobble even more NPI in the future. Until now, demand has been driven by small private manufacturers of stainless steel. The country's largest steel producers, the state-owned enterprises (SOEs), have yet to begin using NPI on a wide scale. Mr. Li says it's only a matter of time before the big producers, which make about 40 per cent of China's stainless steel, turn to NPI. "They sell their products in the higher end of the market so they can afford refined nickel, right now," he says during an interview in his spacious office in Xuzhou. He predicts that within two years the SOEs will diversity their sources of supply. If so, that will take another big bite out of global demand for refined nickel. 
A metal gets hammered Environmental worries The question is whether NPI will become more than a Chinese phenomenon. Because of steep duties, it's not economical for Chinese NPI producers to export their product to stainless steel producers outside of China. However, Jiangsu Mingzhu is planning to build an NPI plant in the Philippines; it is also looking at constructing another offshore plant in Indonesia. Jim Lennon, an analyst with Macquarie Group based in London, isn't ready to write off the traditional nickel industry just yet. He points out that NPI requires not only cheap nickel ore, but also coking coal and inexpensive electricity - a combination that is hard to find outside of China. Still, Mr. Lennon expects that NPI production in China could reach 200,000 tonnes of nickel this year, or about a third of Chinese demand. What could stop China's NPI boom? One threat is growing environmental concerns. China has already moved to shut scores of high-polluting coal plants and could set its sights on smelters used to produce NPI. As well, if China allows its currency to appreciate, NPI producers could feel the pinch. But Mr. Li, the young chief of Jiangsui Mingzhu, doesn't seem to be worried. With five plants in China, Jiangsu is now the country's second-largest NPI producer. Mr. Li plans to take his company public on the Hong Kong Stock Exchange within the next two years. He has plenty of reason to grin - and Sudbury has plenty of reason to worry. Everything you ever wanted to know about nickel pig iron but were afraid to ask What is it? Nickel pig iron (NPI) is a material produced in China that is used as a substitute for traditional refined nickel in the production of stainless steel. Nickel is the key ingredient that makes stainless steel shiny and corrosion resistant. Is it new? Yes. NPI was first made in China in 2005 and only produced in large quantities beginning in 2007. How is it made? The key ingredient in NPI is low-grade ore, usually imported from Indonesia or the Philippines. The ore, which generally contains less than 2 per cent nickel, is unsuitable for traditional nickel production. NPI manufacturers mix the ore with coking coal and aggregate or gravel, then transfer it to a furnace, which smelts it. NPI producers originally used blast furnaces powered by coal, but a new generation of producers rely upon electric furnaces, which produce NPI with a higher nickel content. What does NPI consist of? NPI consists of 4 to 15 per cent nickel. The rest of the material is pig iron - an important advantage since iron is also needed to produce stainless steel. How is this different from traditional nickel from Sudbury? Traditional nickel begins with higher-grade ore, with a nickel content typically above 2 per cent. The ore is crushed and smelted to remove many impurities. The smelted material goes to a refinery where it is processed into pure nickel. Is NPI cheaper to produce than refined nickel? It depends upon how you do your accounting. Innovation and improved technologies have reduced the cost to between $7 (U.S.) and $8 a pound of nickel. In comparison, the cost of producing a nickel in Sudbury is thought to be about $5 a pound. However, the cost of building a traditional nickel mine, smelter and refinery are massive compared to the cost of building an NPI factory. Why do Chinese stainless steel producers use NPI? For two reasons. One, they can often buy the nickel content in NPI for slightly less than buying the equivalent amount of pure nickel. Two, they get the pig iron in NPI - which they need to produce stainless steel anyway - for free. Why is NPI used only by Chinese stainless steel producers? China levies a steep export duty on NPI that makes it cost prohibitive to ship the product outside of the country. To avoid the duty, some Chinese companies are planning to build NPI plants in the Philippines or Indonesia. Andy Hoffman | |
| May 13, 2010 Cobalt Bringing Mining Back To Salmon Publisher: LocalNews8.com Author: Aman Chabra | |
| Discovery Of Cobalt Brings Major Mining Project Back To Lemhi County
LEMHI COUNTY, Idaho -- Lemhi County and the mining industry have been almost synonymous for the better part of a century. | |
| May 11, 2010 Grandich Client Update - Formation Metals Publisher: The Grandich Letter - Market, Economic, Social, Political and Life Commentary Author: Peter Grandich | |
| Last Friday's news (May 07, 2010, Formation Metals Raises $10 Million) from FCO seems to have fallen on deaf ears. Their initial news release dated March 18th proposed an $8.6 million financing to be done at $1.50 -- when their stock closed that day at $1.43. Formation was still able to close these latest private placement offerings at $1.50 when their stock closed at $1.25 -- basically at a 20% premium to the market. No doubt there was pressure on them to reduce the offering price to close the financing sooner. FCO's financing consisted of $8 million raised through an unsecured (convertible @$1.50) debenture and $2 million raised in a $1.50 unit offering. Of course they could not have anticipated the financial riots in Greece and the previous day's largest loss ever of the Dow in the course of a trading day. The timing of the release could not have been worse and seems to have squashed any momentum the news could normally have created -- but public companies don't have the luxury to pick the timing of their releases when it comes to material news. Aside from the lackluster performance of FCO's shares, FCO management has come through on their commitments so far -- true to their CEO's quote in their March 16 news release announcing the withdrawal of the previously filed prospectus; "A more viable option is to seek a smaller working capital equity financing during these negotiations and then, once the terms of the debt financing and off-take arrangements are clarified, we can continue with the equity portion of the ICP mine finance. This is exactly what we intend to do. We are confident we can get this project built and deliver the value that we have promised our shareholders." One could read between the lines on this quote and conclude Formation wants to minimize equity issuance at current share prices and plans on doing a larger equity raise at potentially higher prices, most likely in conjunction with a commercial debt arrangement down the road in an effort to limit dilution. Worthy of note in this last financing news release is the fact that this is an unsecured convertible debenture. This is a crucial aspect of the debenture as it means the debt is not secured against any assets of the Company. This not only protects the cobalt mine and refinery assets, but it also leaves the collateral available for leveraging commercial bank debt financing which is expected to be a key component of the mine financing -- they appear to be thinking ahead about the bigger picture here. Another bit of information worth noting is that interest on the debenture is payable in cash or shares and the share value is to be calculated at the then current market five day weighted average share price. Thus, assuming the share price can be much stronger as the financing and construction on the cobalt project moves forward, fewer shares will needed to be issued to pay the interest. Lastly, this debenture can also be paid off at any time at Formation's discretion, albeit with a penalty. This seems to have been worked into the debenture as another means of reducing interest payments and limiting share issuance. Management has advised me that outside of the equity and commercial debt financing efforts, they are in fact working on several additional financing avenues, all of which, according to FCO, have received considerable interest. These include VPP's (volumetric production payments) as well as off-take arrangements. Both are similar in that they receive cash upfront for a portion of future revenues (VPP's) or cash upfront for a portion of future commodity production (off-takes). More importantly, what both these arrangements appear to do is provide additional assurance for the commercial banks to sign on the dotted line, knowing that other groups have done their due diligence and are betting on Formation's future ability to produce of high purity cobalt metal, including byproduct copper and gold. Cobalt has been getting a lot of attention post LME listing in February, and has performed well since that time. There is an interesting (and timely) interview published of Gordon Monk by The Energy Report that FCO posted on their website http://www.formationmetals.com/s/CobaltNews.asp . Gordon Monk is a Principal of Performance Capital Advisors in Vancouver, a boutique merchant bank. In that interview Mr. Monk discusses the cobalt markets and the limited amount of players involved. He states, among other things, that he believes there is tremendous opportunity and incentive for investment in primary cobalt users, especially North American based companies such as Formation Metals, which he mentions by name. | |
| April 23, 2010 The Global Movement Towards Green Publisher: The Energy Report Author: Gordon Monk - Performance Capital Advisors | |
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In this exclusive interview with The Energy Report, Gordon Monk of Performance Capital Advisers discusses the worldwide movement toward green sources for energy production. Gordon explains how cobalt and lithium are linked to solar and wind power. He also talks about why he prefers primary producers of cobalt to those that obtain cobalt as a byproduct of other operations.
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| April 22, 2010 Cobalt Up, Moly Steady, How is the LME Doing so Far? Publisher: MetalMiner Author: Stuart Burns | |
| Cobalt Up, Moly Steady, How is the LME Doing so Far? The LME's minor metals contract has been up and running for two months now and although both are at a nascent stage they have already begun to exhibit diverging patterns of behavior. Molybdenum prices have stagnated whereas cobalt prices have picked up markedly. Although it is premature to be drawing any conclusions at this stage we thought it would be interesting to look into the more active to see if it is the contract or the background market that is driving the different behavior. From a practical standpoint the cobalt contract trades 99.3% minimum purity, which is a highly tradable form of cobalt. The molybdenum contract is bagged or drummed roasted concentrate and from that aspect probably a little less flexible as a shape and storage would be more complicated. Cobalt metal is eminently usable in the metal form as it can be melted for the production of alloys and granules/powder, dissolved in acid to provide a precursor to a whole range of chemical products and many grades of fine powder or just kept in a drum as an investment. Cobalt also has a broad range of end uses and is not necessarily reliant on one main industry sector, although combined rechargeable batteries and super-alloys/hard metal/high speed steels take up over half of cobalt consumption. So from a contract point of view it could be that cobalt is finding more favor with the market because it is more flexible and hence finds more takers. The first prompt date isn't until May 21st and trading from this point should give a better guide as to the level of trade interest, but the initial stages of the contract must be encouraging for the LME. We interviewed Steve English of SFP Metals, Chairman of the Minor Metals Trade Association (MMTA), an acknowledged industry expert and broadly a supporter of the LME's development of the minor metals contracts. Cautioning that any observations are at an extremely early stage -- nickel and aluminum both took many years to reach a tipping point and have become accepted industry price benchmarks, these minor metals will probably take a year, possibly three, according to Steve. First, we cannot judge the success of these contracts until we see how stock levels develop on the exchange and that won't happen in a meaningful way until after May 21. At the moment there is just 5 tons of cobalt on the LME. Any trader could pick that up and "corner the market" by holding all the physical metal on the exchange. In reality, the market needs 1000 tons to function effectively and that won't happen until the market develops a backwardation where spot is significantly over 3 months, attracting physical delivery onto the exchange. For the time being, metal is all being consumed by industry particularly in the US and Japan. Import figures for the US in 2010 are twice what they were in 2009 and the trend continues. January imports were 650 tons. February's were 1096 tons according to Steve English. Stocks were run down severely in 2008/9 and now demand is coming back from aerospace, battery consumption and medical products. China by contrast has not seen any significant run up in prices this year as reported by our own MetalMiner IndX (free with registration) which tracks domestic China cobalt prices. So western physical demand rather than any impact of the LME contract is what is driving current price strength both physically and on the LME. The market will be used by two kinds of players. On the one hand, there will be investors, for them at the moment the contract is not sufficiently liquid to make it an attractive market but open interest is increasing. Cobalt is clearly the more popular of the two metals in terms of open interest -- currently 223 open contracts vs. 31 for molybdenum, but even so investor interest is light. The other user will be the participants for whom the contract was intended -- producers, consumers and in between the processors. For many in the industry the greatest benefit has always been seen as helping the processors. These are the businesses that rely on buying cobalt, putting it through a process which adds value and then selling that product on at a later date. By hedging, the price risk element can be negated (though there are cash flow implications) so the business can concentrate on what it does best and that is to improve the margin created by adding value to their product. For the processors to take up the contract will require widespread acceptance of the LME price as being the industry benchmark, adopted by both producers and consumers -- back to the tipping point of widespread adoption. So cobalt at least is off to a reasonable early start. Molybdenum for the time being does not appear to be going anywhere but as we implied at the outset, a lot of water needs to pass under the bridge before a valid judgment can be made. Our thanks to Steve English of SFP Metals and other industry experts interviewed in the process of this review. --Stuart Burns | |
| April 21, 2010 Cobalt Finds its Feet as Demand Picks Up Publisher: Metal-Pages | |
| Cobalt Finds its Feet as Demand Picks Up LONDON (Metal-Pages) 21-Apr-10. The cobalt market has picked up in recent days, with consumer restocking boosting prices in the spot market. Material is trading in a wide range, but there is a clear upward trend, which has also been reflected to a degree by a pick up in traded volume and prices in LME cobalt futures this week. While 99.3% grade cobalt was still being reported trading at $20.50/lb recently, in the last couple of days traders said it has become difficult to obtain Russian ingot at less than $21/lb, and business has moved increasingly into $21-22/lb range in Europe and up to around $22.50/lb in the US. With intermediate grade cobalt also trading around $22.50/lb, high grade material is trading in a wide range, depending on grades and delivery terms, between about $22.75/lb and up to $24.75/lb for premium Falconbridge material. "The uncertainty about Congo cobalt exports has not yet fed into cobalt prices, but it will in the next couple of weeks when the market realises that it would affect raw materials," a trader commented on reports that the DRC copper and cobalt producing province of Katanga has once again moved to ban exports of unprocessed concentrates. The postponement due to flight restrictions of the Cobalt Development Institute (CDI) conference in Cape Town, where industry and market participants were due to meet and negotiate prices, has also put the brakes on the cobalt rally. With the conference postponed possibly until November, such business meetings are now more likely to take place in London at the conference held next week by the Minor Metals Trade Association (MMTA). Another trader said however that the market in the US has picked up swiftly, with consumers across all fields including aerospace alloys, industrial gas turbines and catalysts stocking up on metal again. The latest recorded US import figures show a jump of more than 68% from 650 tonnes of cobalt imported into the country in January to 1,096 tonnes in February, the trader noted. The US currently has no primary cobalt production, at least until Formation's Idaho Cobalt Project which recently entered construction comes on stream. Consumption by individual US customers since the start of the year has more than doubled, the trader added. Cobalt has been trading higher on the LME, with backwardation on three months to fifteen months dates. The price reached a level of $47,000/tonne ($21.31/lb) this week, although three months futures edged back down to $45,000-46,000/tonne ($20.41-20.81/lb) again today. The LME contract is based on 99.3% grade cobalt with warrants in different LME warehouses and does not factor in location and grade premiums. "The LME prices does not have much impact on the physical price, and it will not have a direct relation to it until physical delivery starts," another trader commented. Physical delivery of the miner metal against the LME warrants is due to begin next month. After a volatile period in February-March when prices were depressed by some low sales, the cobalt market has found its feed over the past month and has established a firm floor above $20.50/lb. Most market participants believe that supply of minor metal will fall short of demand this year, with only one third of industry and market participants who took part in a recent Metal-Pages poll suggesting cobalt will be in oversupply in 2010. According to CDI statistics published this month, global apparent consumption of cobalt fell 8% last year to 56,000 tonnes, as a sharp drop in consumption in Asia and Europe offset increased consumption in China. Global supply outpaced apparent consumption, with a total reported production of 59,851 tonnes, according to CDI, up 5.33% from 56,821 tonnes produced in 2008. CDI members (Russian producer Norilsk Nickel left CDI last year) produced 25,074 tonnes between them. | |
| March 25, 2010 Building a Cheaper (Maybe Cleaner) Catalyst Publisher: Science News Author: Alexandra Witze | |
| [Another use for cobalt as a catalyst] Chemical engineers have found a cheaper and possibly better material than platinum for cleaning up the exhaust streams of diesel vehicles. Many automobiles use platinum-containing catalytic converters to help clean their exhaust streams of various pollutants, notably the nitrogen oxide compounds that can contribute to smog. But the high and volatile price of the precious metal makes it difficult to build an economical catalyst. An alternative material, known as perovskite, is far less expensive than platinum and may do the job more effectively, engineers from the research arm of General Motors report in the March 26 Science. "It's excellent work, really groundbreaking to be able to have an alternative to platinum-based catalysts," says Louise Olsson, a catalysis researcher at Chalmers University of Technology in Göteborg, Sweden, who was not involved in the research. "It's going to save a lot of money." Diesel cars can cost $1,000 to $5,000 more than comparable gasoline models because of the need to modify the engine and add more expensive catalytic converters to meet emissions standards. Platinum, used in many of those converters, sells for about $1,590 per troy ounce. In Europe, about half of passenger vehicles run on diesel. The percentage is far lower in the United States, although many large vehicles and freight trucks run on diesel because of the high fuel efficiency of those engines. The problem is that diesel engines need to burn "lean," or in the presence of extra air, compared with regular gasoline engines. The additional oxygen makes it harder to remove the resulting nitrogen oxide compounds. A team led by Wei Li at GM's Global Research and Development branch in Warren, Mich., decided to focus on a particular chemical reaction in diesel exhaust streams, in which platinum is used to convert NO to NO2, which can be further processed and released to the atmosphere as nitrogen gas. "This is a critical reaction required in the diesel system," explains Li. "For most gas applications people have already moved away from platinum, but for diesel we cannot." In their laboratory the researchers replaced a commercial platinum-based catalyst with one based on perovskite oxides made of cobalt or manganese combined with oxygen. By adding a bit of strontium and lanthanum into the mix, Li's team showed that the manganese-based perovskite catalysts converted NO to NO2 about as well as platinum-based ones did. The cobalt-based perovskite catalyzed the reaction at rates significantly higher than platinum. "We were looking for a good catalyst, but we were not expecting it to be that good," says Li. The new catalysts are not, however, entirely free of precious metals. The team had to add a bit of palladium -- which goes for about one-quarter the cost of platinum -- to eliminate some sulfur buildup. There's a long way to go before perovskite-based catalysts appear in automobiles, notes Jim Parks, a catalyst researcher at the Oak Ridge National Laboratory in Knoxville, Tenn. Li's team performed its tests in simulated exhaust streams; now other GM researchers are doing experiments to see how the perovskite catalysts handle real pollutants, Li says. The new work is "a step in the right direction, but there will be more to do with developing this technology," says Parks. -END- | |
| February 22, 2010 London Metal Exchange Expands With Molybdenum, Cobalt Publisher: Bloomberg Author: Claudia Carpenter | |
| Feb. 22 (Bloomberg) -- The London Metal Exchange, the world's biggest metals market, began trading today in cobalt and molybdenum, commodities used in everything from jet engines to stainless steel. The 133-year-old exchange offered futures on the metals on its floor starting at 12:20 p.m. local time. Codelco, the world's second-largest molybdenum producer, wants to support the molybdenum contract, according to Gonzalo Cuadra, a Codelco managing director. The LME is expanding into so-called minor metals as it opens a first overseas office in Singapore and proposes a venture with the London-based Baltic Exchange to bring trading of freight derivatives onto a new exchange. The bourse handled $7.41 trillion of contracts last year, including 49.7 million in aluminum, 26.5 million in copper and about 30,000 in Mediterranean steel billet. Trading in the new contracts may exceed steel "because moly and cobalt have a history of volatility and they have a wide range of industrial applications," said Stephen English, marketing manager of SFP Metals (U.K.) Ltd. in London, who has traded cobalt for more than 30 years. LN Metals International Ltd. traded the first two metric tons of cobalt at $43,650 a ton ($19.80 a pound)[for Grade "B", 99.3% purity], Nigel Dentoom, chairman of the company, said at the LME. He declined to say if LN Metals was the buyer or seller. Molybdenum Traded Molybdenum traded earlier today at $35,000 a ton ($15.88 a pound), exchange spokesman Stephen White said. Total trading volume won't be available until tomorrow, he said. About five companies were involved in trading by midday today, said Chris Evans, head of business development at the LME. Cobalt prices dropped 2.4 percent to $19.52 a pound this year, according to Metal Bulletin. The benchmark molybdenum oxide contract quoted by Metal Bulletin climbed 43 percent to $17.25 a pound. The LME estimates both markets combined at about $7 billion, compared with $5 billion for tin, which the bourse already trades. "While we do not intend to utilize the molybdenum contract upon its launch, we will continue to monitor the activity on the exchange," said Bill Collier, a spokesman for Phoenix-based Freeport-McMoRan Copper & Gold Inc., the world's largest molybdenum producer. Production of molybdenum last year was about 440 million pounds (199,581 tons), while cobalt output was 54,000 tons, according to Eric Taarland, a senior consultant at London research company CRU. Output of both metals exceeded demand, according to CRU estimates. Molybdenum Demand Molybdenum demand has gained because of growth in stainless steel output, while cobalt consumption was driven by sales of rechargeable batteries, according to Taarland. There are 12 cobalt and molybdenum brands registered for delivery against the LME contracts, including Vale SA's Vale Inco unit and Molibdenos y Metales SA. The LME plans to combine its Mediterranean and Far East steel billet futures into a global contract. Volumes reached about 3.3 million metric tons of steel, worth $1.4 billion, since they were introduced in April 2008 to Feb. 12, according to the exchange. --Editors: Dan Weeks, Tony Barrett. | |
| January 12, 2010 Automakers plan for an electrified future, but plenty of hurdles remain Publisher: The Plain Dealer Author: Robert Schoenberger | |
| DETROIT -- The head of BYD Co.'s export division took the stage today at the North American International Auto Show and explained matter-of-factly how China's fourth-largest car company would become No. 1 globally by 2025: by building and selling lots of electric cars. "Electric vehicles have become a mainstream solution for mobility," Henry Li said. Like BYD, plenty of other car companies are also gearing up for an electrified future. But while electric vehicles show a lot of promise, there's a long way to go before they become widely available, affordable, reliable and able to meet consumer expectations. "Until the battery technologies get to the point where batteries are affordable, full-speed electrics are going to be expensive," said Curt Westlake, U.S. marketing director for Korea's CT&T, a company that hopes to sell low-speed electric vehicles in this country by the end of the year. Some of the world's largest car companies are promising electric vehicles and plug-in hybrids for sale within the next year or two. Still, many of the models on display today during a press preview of the Detroit show, which opens to the public Saturday, were either extremely expensive, highly impractical or both. Take the Tango, from Commuter Cars of Spokane, Wash. The two-passenger car looks something like a Chevrolet Aveo after an encounter with a trash compactor. Company founder and president Rick Woodbury said the plan is for consumers to buy the $150,000 car in three parts from different vendors and assemble it themselves -- a way to get around federal safety rules for cars. "It only takes a few hours," Woodbury said. "It's really easy." Myers Motors of Tallmadge, which is not represented at the Detroit show, makes a three-wheeled, single-seat electric vehicle called the NmG, for "no more gas." It plans to have a two-seat model, the DUO -- an acronym for Doesn't Use Oil -- on sale late this year for less than $30,000. The highest-profile electric is General Motors' Chevrolet Volt, a vehicle the company has promised will be available late this year for about $40,000, after a $7,500 federal tax credit. "We are doing a tremendous amount of preparation for this launch," Chevrolet General Manager Jim Campbell said in an interview. The Volt will be capable of driving 40 miles on electric power. When the battery runs low, a small gasoline engine will run the car's electric drive system and recharge the batteries. GM plans to produce about 25,000 Volts per year starting in 2011. Other more mainstream electric vehicles planned include Toyota's plug-in hybrids and battery-powered cars for 2012, and Ford's promised battery-powered Focus by 2012. Ford this week said it would spend $450 million to make battery packs in Michigan, a move that could bring 1,000 jobs to the United States from Mexico. But GM, Ford and Toyota are planning small production runs and limited sales efforts on their electric vehicles. The overwhelming majority of cars coming out of those companies for the next several years will be traditional gasoline-powered cars and trucks, said Erich Merkle, president of consulting firm Autoconomy.com. "They're testing the market," Merkle said. "You've got to have your foot in the water and be prepared for market-changing shifts. But they're not getting ready to shift large portions of their production capacity." Merkle said in the near term, expensive electric cars will appeal to niche customers -- tech fans who want to latest gadgets possible, environmentally minded shoppers willing to pay a huge premium to avoid emissions and commercial customers looking for low-speed vehicles to perform specific tasks. Companies are targeting more mainstream buyers, but Merkle said the prices are still too high to attract legions of buyers. Tesla Motors, the company that makes the $101,500 Roadster sports car, today showed off the latest version of its Model S, a family car it hopes to sell next year. After tax credits, the seven-seat Model S should cost just under $50,000 for the base model, about double the cost of the larger, gasoline-powered Chevrolet Traverse, also a seven-seater. CT&T's Westlake said commercial buyers have already turned to electric vehicles for many uses, such as moving people and equipment across large college campuses and theme parks. He said he believes there is a consumer market for low-speed, inexpensive electric cars, but he acknowledged that other electric car companies have yet to sell similar vehicles in large numbers. Still, there's BYD, the company that believes it will become No. 1 in China by 2015, mostly by selling more plug-in hybrids and electric cars. Li said that company has begun working with consultants to redesign its cars for more-stringent U.S. safety requirements, and he believes the products will be on sale here late this year. "We will be in this market with electric vehicles," Li said. BYD made similar statements last year and in 2008. -END- | |
| January 08, 2010 Cobalt hits highest for 14 months on new year demand surge Publisher: MinorMetals.com Author: Editing by Mark Shaw | |
| London, 08 January 2010 - Cobalt prices climbed to their highest levels since November 2008 in Europe on Friday, with the first full week of 2010 witnessing an upsurge in demand from end-users, traders said. High-grade 99.8 percent metal was quoted at $22.00/23.00 per pound, while 99.3 percent Russian metal stood at $21.00/22.00, both up some $2.00 from prevailing levels at the turn of the year. "There does seem to be an upturn in enquiries at the moment," one trader said. End-users had flocked back to a market that is perennially tight of metal, others said, with many producers unable to offer metal until early in the second quarter. China's Jinchuan has also upped its offer price to $25.50 per pound [from] $23.50. "This market is tighter than salt supplies in West Berkshire... we are looking at a price of $25 next week," another trader said. The move was also exacerbated by some speculative interest ahead of next month's futures contract debut on the LME. The LME will introduce its cobalt futures contract on February 22, just less than two months away. So far, the LME has approved brands from Vale Inco, Votorantim Metais Niquel, Sumitomo Metal Mining and Jinchuan Group for delivery against the contract. Prices are likely to advance further after the LME contract launch, traders said, because very little stock available will be available to be warranted in warehouses, resulting in the potential for technical tightness. "If you look at nickel, there are over 150,000 tonnes of stock, which would cost around $6.5 bullion to buy," the second trader said. "In cobalt, there won't be much more than 1,000 tonnes, which can be bought for $44 million - there are plenty of firms who could snap that up if they wanted to." | |
| December 11, 2009 How B.C. firm won 'greenest mine' rights Publisher: Globe and Mail Author: David Ebner | |
 To build a $140-million cobalt mine in a national forest in Idaho, tiny Vancouver junior miner Formation Metals Inc. (FCO-T2.16-0.03-1.37%) turned to the state's chief rainmaker, Cecil Andrus. Mr. Andrus was Idaho's longest-serving governor, a Democrat who was elected four times. Between two stays at the governor's mansion in Boise he was part of President Jimmy Carter's cabinet as secretary of the interior. During his years in office, Mr. Andrus was known for his environmental passion, and opposition to a proposed mine in the state helped get him elected in 1970 to his first term as governor. He was exactly the man needed by Formation Metals to help open an underground mine in a national forest in federally protected mountainous wilderness. The company wanted to unearth a metal used in turbines for jet engines and batteries, where demand could spike as electric cars become more common. It would be the only cobalt-focused mine in the United States. Now Formation Metals has cleared a major hurdle by passing a nearly decade-long environmental assessment completed by the U.S. government, which this week approved the company's plan of operation. Clearing trees from the site is set to begin in January and work on the main facilities is scheduled for spring, with the mine to open in 2011. The little-known Vancouver upstart had staked a cobalt claim on public land in the mid-1990s in Salmon-Challis National Forest. In 2001, the long process to obtain the required permits began. Though there had been mining in the region in the past, Formation Metals was still fighting through the paperwork in 2007, six years after it started, when chief executive officer Mari-Ann Green convinced Mr. Andrus that the cobalt mine made sense, environmentally and economically. Mr. Andrus, who joined the company's board of directors, went to work, trumpeting the merits of the mine to officials in Idaho, and especially at the Department of Agriculture in Washington, of which the Forest Service first reference is a part. "When you're dealing with the bureaucracy, it always helps to talk to the heads of the various departments, so they understand what you're trying to do," Mr. Andrus, 78, said in an interview from Boise Thursday. "It's easier to do that face to face, eyeball to eyeball, rather than in e-mails that go unread." Before the mine can be built, Formation Metals needs to close deals for debt and equity to finance the project; it officially began that process in November and hopes to conclude before year's end. The company has periodically raised chunks of cash in its two-decade history, including $20-million in 2007 and $9-million this year. The TSX-listed company has already sunk $50-million into the cobalt project and owns a metals refinery in Idaho. "There were some very hard days," Ms. Green said an interview Thursday. "We've gone without paycheques from time to time. When we set out, we set out to find our shareholders a mine and we've done that and we're going to bring that to fruition. We staked the mine at a time people weren't really looking for cobalt. It was difficult to raise money for it. Now everybody's talking rare-earth minerals and lithium and cobalt." Ms. Green was educated far from the mining business. She has a bachelor's degree in education from the University of Manitoba and worked as a school principal in that province, British Columbia and Alberta before moving to Calgary in the early 1980s to join the corporate world. She was hired in a do-everything role at small junior energy company and learned on the job. "I had an entrepreneurial streak," she said. In 1988, she and a trio of geoscientists started Formation Metals, which now has about 50 employees. Ms. Green met Mr. Andrus several years ago and sold the green politician on a mine that would bring jobs without destroying the land. Mr. Andrus was eventually convinced and in turn quelled opposition among environmentalists in the state with the promise of the "greenest mine in America." "He's a statesman," Ms. Green said. "He really helped us." The Idaho Conservation League last year withdrew a threat of a court challenge when Formation Metals said it would put up $30-million in reclamation bonds and spend $150,000 annually on watershed projects when the mine operates. The cobalt mine could product 1,525 tonnes of the high-purity metal annually for at least a decade, the company has said. The volume is about 3 per cent of global production and would be enough to supply more than 10 per cent of the demand in North America. The U.S. is the biggest user of cobalt. Cobalt reserves are most prevalent in Democratic Republic of the Congo and selling is dominated by mining giants Xstrata PLC and Glencore International. The U.S. wants to wean itself off foreign oil, but the same sentiment exists in cobalt, where the country is "captive" to Xstrata, Mr. Andrus said. Local politicians in the Lemhi County, home of the mine, have backed the project from the beginning. "It's good for the country, to produce something for a change," said Robert Cope, a county commissioner. "I'd like to see this country move away from a service-based economy back to manufacturing." | |
| November 03, 2009 Jinchuan raises cobalt prices by Rmb20,000/tonne Publisher: Metal-Pages | |
| BEIJING 03-Nov-09. Jinchuan Group, the number one cobalt metal producer in China, raised its website offer prices for cobalt metal yesterday, supported by the recent increase in overseas cobalt prices. The company is now quoting Rmb 370,000/tonne ($24.63/lb) for 99.8% cobalt metal, in comparison with its previous quotation of Rmb 350,000/tonne ($23.30/lb) which had been in place since 3 August 2009. The producer has also raised its offer price for the plate shaped cobalt to Rmb 368,500/tonne ($24.53/lb) from the previous Rmb 348,500/tonne ($23.20/lb) basis, also representing an increase of Rmb 20,000/tonne. Market sources reported that some Shanghai-based suppliers have already increased their offer prices for 99.8% cobalt metal to about Rmb 370/kg ($24.63/lb) recently, and players suggested that the rise in Jinchuan cobalt prices is likely to prompt a further increase in price from other domestic suppliers. -END- | |
| October 30, 2009 First Quantum must pay Congo $6 mln damages -court Publisher: Reuters Author: Joe Bavier | |
| * Court rules against First Quantum in contract dispute * Orders company to pay $6 million to Congolese defendants KINSHASA, Oct 30 (Reuters) - First Quantum Minerals (FM.TO) must pay Congo $6 million in damages over three failed lawsuits it filed against the government and state agencies after a mining project was cancelled, court documents showed on Friday. Democratic Republic of Congo cancelled the Canadian miner's $500 million Kingamyambo Musonoi Tailings (KMT) copper and cobalt project in August as part of a government review of 61 mining deals. On Aug. 26 and Sept. 3, KMT and Congo Minerals Development (CMD), a wholly owned subsidiary of First Quantum, filed three suits against Congo, state miner Gecamines and the mining regulatory agency, CAMI, in the country's highest civil court. In the decision, which was seen by Reuters on Friday, the court in Congo's capital, Kinshasa, upheld the government's cancellation of the project and ordered KMT and CMD to pay damages for filing the cases. "In consequence, (the court) orders each of the plaintiffs to pay the defendants the equivalant of $3 million in damages and interest," the decision, sent to Congo's President Joseph Kabila and Prime Minister Adolphe Muzito, read. KMT and CMD must also pay court costs, the decision added. Contacted by Reuters about the ruling, First Quantum's president Clive Newall declined to comment. But he said the company would release a statement on the matter. Earlier this month, First Quantum attempted to withdraw the suits and many analysts expect the company to move the dispute to a court of international arbitration to defend its investment. Under Congolese law, however, both the plaintiff and defendant must agree to drop a civil case and the government, CAMI, and Gecamines refused to withdraw from the legal action. First Quantum's KMT operation is so far the only major mining project to be cancelled by the review, set up to boost state revenues from deals signed mostly during the chaos of a 1998-2003 war and the transitional government that followed. Freeport-McMoRan's (FCX.N) giant Tenke Fungurume (TFM) mine, believed to hold the world's largest undeveloped copper and cobalt reserves, has so far failed to clear the review. Officials from the U.S.-based firm have continued to negotiate with the government, and a spokesperson for TFM said on Friday that the company was now waiting for a decision on the contract. -END- | |
| October 26, 2009 Congratulations to Winner of 8oz Silver! Author: Formation Capital Corporation | |
| Congratulations go out to Mr. Orval Barnes of Garibaldi Highlands, BC as the winner of 8oz of silver from Formation Capital's Sunshine Refinery. Mr. Barnes was in attendance at the "Money Talks All Star Trading Super Summit" at the Sheraton Vancouver Wall Center on October 24th where Formation Capital was an exhibitor. The Money Talks Trading Summit was hosted by Michael Campbell and featured expert speakers such as Victor Adair, Tyler Bollhorn, Jack Crooks, Dennis Gartman, Peter Grandich, Mark Leibovit, Steve Todd and Chris Lori. - END - | |
| October 23, 2009 Electric Cars Could Pose a Challenge to Rare Earth Supply in "Nightmare Scenario" Publisher: MetalMiner Author: Sturat Burns | |
| October 23rd, 2009 Dr Irving Mintzer principal of MEG LLC, an energy consulting firm, described a "nightmare scenario" at the Critical & Strategic Metals Summit in Washington DC this week. Driven not by cost advantage but by a combination of government incentives, legislation and taxation, Dr Mintzer painted a picture of a world in 2030 in which a third of the probable 72 million vehicles produced each year by that time are either fully electric or hybrid petrol/electric vehicles. Why is that a nightmare scenario you may ask? Surely that would be a quieter, cleaner altogether better world if the role of the internal combustion engine was reduced? Well indeed it would be a quieter, cleaner world, the nightmare element is the demand it would put on electric power generation and on production of certain key metals needed to make such vehicles. True 2030 is a quite a long way off. Twenty years is probably a reasonable timescale to design and build a smart grid capable of handling the power demands such a switch would make. It is also just about long enough to build the mix of nuclear and renewable energy sources that would be required to meet the power demands without increasing our carbon emission even more than they currently are. It would hopefully be long enough to improve renewable technologies sufficiently that they are economical without the subsidies they need now to achieve project funding. But metal demands look challenging; by Dr Mintzer's estimations at current Cobalt (Co) and Neodymium (Nd) content levels in a typical Lithium ion battery (everyone agrees there is enough Lithium, it's the minor metals needed for the cathodes and for the braking regeneration units that will be the challenge) it's hard to see where the metal will come from. In current cars some 5kgs of Co and 2 kgs of Nd are needed in every car. Even if improved technology reduced this to 0.5kgs of cobalt and 1 kg of Nd the world would need an additional 12,000 tons of cobalt and worse some 24,000 tons of Nd. According to an informative presentation given by David Weight of the Cobalt Development Institute, the world currently produces about 55,000 tons of cobalt and is broadly in supply/demand balance. Some 50% of supply comes from the politically unstable Democratic Republic of the Congo (DRC), the world's richest source of cobalt. The rest mostly comes as a by product of nickel and copper production and is hence somewhat price inelastic, meaning the primary economics of the mine are driven by nickel and copper demand not cobalt. Cobalt demand has risen at a steady 5.6% for the last ten years which if extrapolated forward would see demand in the region of 163,500 tons, before we add in additional demands for electric cars. Extrapolating figures back from a separate presentation given at the conference by Dudley Kingsnorth, Neodymium production is currently around 17,000 tons and typically represents about 16.3% of Rare Earth deposits. Pretty much all of it currently comes from China but several new potential mines were promoted at the conference, all looking for funding. In reality no more than two of these are likely to come to fruition with a probable production capacity of less than 30,000 tons, at the above Nd content guide that would yield just 5,000 tons of Nd, somewhat short of the additional 24,000 tons required. As Dudley Kingsnorth explained in a video interview on MetalMiner earlier today these Rare Earth mines and processing facilities take at least 10 years to go through environmental, feasibility and funding stages before a kg of metal is produced. In reality, Dr. Mintzer's scenario is unlikely to become reality but the above projections illustrate the dramatic effect a new technology can potentially have on metal demand when supply is finite. -- END - | |
| October 23, 2009 Growth in electric vehicle sector to boost demand for cobalt and neodymium Publisher: Metal-Pages.com | |
| WASHINGTON D.C. (Metal-Pages) 23-Oct-09. Demand for cobalt and neodymium is set to surge as automakers are expected to ramp up production of electric and hybrid vehicles, according to Dr Irving Mintzer, principal at Meg LLC. Based on a high demand scenario for vehicles powered by electric drive chains, Mintzer forecasted that additional demand for cobalt could double from current levels to 120,000 tonnes a year worldwide and 48,000 tonnes a year for neodymium by 2030. The rise in demand for cobalt will be twice the current overall rate of global production, he told the Managing Supply Chain Risks for Critical and Strategic Metals conference in Washington D.C. In the U.S. alone, Minzter forecasted that demand for cobalt could rise by an additional 25,000 tonnes a year and 10,000 tonnes for neodymium if demand for electric vehicles gathers pace in line with some analysts' projections. "Where in the world is the production going to increase rapidly enough to meet the additional levels in annual demand?" he said. "As we promote these technologies we need to think a little bit further ahead and look at what it means to lower dependence on imported oil from countries maybe considered unstable or unfriendly and increase our demand for these essential components." Under a low demand scenario for vehicles containing cobalt and neodymium components, Mintzer forecasted additional demand for cobalt to hit 12,000 tonnes a year and 24,000 tonnes a year for neodymium by 2030. The forecast comes as automakers produce more electric vehicles using materials such as samarium-cobalt and neodymium magnets for electric motors in hybrid cars such as the Toyota Prius, Honda Insight and Ford Foucs. Concerns over the dependence on foreign oil and environmental issues are expected to boost sales of hybrid and electric vehicles. With the U.S. government also now pledging funds to spur investment in cleaner and more efficient vehicles, cars containing electric drive chains could account for about one third of the U.S market by 2030, according to Mintzer. He also suggested that about one third of the 72 million vehicles sold worldwide could contain electric drive chains. Other industry participants believe the market penetration of electric and hybrid vehicles may be lower than some forecasts as the technology is slow to develop. Lux Resources has forecasted that electric and hybrid cars will only account for about 6 million vehicles of the total auto market by 2020. -END- | |
| October 08, 2009 Around 25 Congo mining deals risk cancellation Publisher: Reuters Author: Thomas Hubert | |
| * Projects at risk invole "second tier" assets * Tenke Fungurume negotiation deadline Oct. 12 KINSHASA, Oct 8 (Reuters) - Some 25 mining contracts in Congo involving "second tier" copper, diamond, and gold assets could be scrapped if companies fail to present the results of feasibility studies by a December dealine, the Ministry of Mines said on Thursday. "We will see if the studies were done. They will be able to present their reasons, and the cabinet will decide whether to extend (the deadline) or withdraw the permits. The goal is to have these assets in capable hands," Deputy Mines Minister Victor Kasongo told Reuters. Congo completed a review of 61 mining contracts in August as part of an effort to boost state revenues from agreements signed mostly during the chaos and corruption of a 1998-2003 war and the transitional government that followed. However, many companies that saw their partnerships approved by the review panel have yet to present required feasibility study results, Mines Minister Martin Kabwelulu told an investor conference in Kinshasa on Wednesday. "Certain partners started work without finalising their feasibility studies," he said. The companies were initially asked to present the results among documents submitted at the start of the long-delayed review process. But the government extended the deadline when it became clear that the majority of companies had not yet completed their studies. "Eleven companies were either in production or gave feasibility studies. The rest gave nothing. So far we've still received nothing, and we've asked," Kasongo said Thursday. He said around 25 projects in possession of what he described as "second tier assets" in the copper, diamond, and gold sectors were subject to the December deadline. He did not name the projects. Congo cancelled a copper and cobalt mining contract with Kingamyambo Musonoi Tailings, a unit of First Quantum (FM.TO) (FQM.L) in August on the grounds that it had failed to enter into commercial production within an agreed timeframe. Freeport McMoran (FCX.N) and Lundin Mining (LUN.TO), parnters in the giant Tenke Fungurume Mining copper and cobalt project, have been given until October 12 to complete negotiations with the government or risk losing their permit. But despite lingering doubts over the fate of the country's largest foreign-owned projects, analysts had expected completion of the review to boost investor confidence in Congo's high-risk but potentially lucrative mining sector. (Additional reporting by Joe Bavier in Lubumbashi, Congo; Editing by Richard Valdmanis). -END- | |
| September 18, 2009 AN ODE TO INSANITY - Farewell, Katanga Publisher: MineWeb Author: Barry Sergeant | |
| A mining veteran packs his bags, as jaws savagely tighten around the two biggest mining companies in the central African copperbelt. JOHANNESBURG - A mining veteran who has tried to crank up broken down vehicles more times than he cares to remember has decided to pack his bags, days after First Quantum announced that it had suspended work at the 65% complete US$600m Kolwezi tailings project, Katanga Province, Democratic Republic of the Congo. Katanga Province, which hosts some of the world's biggest and highest grade copper deposits (with cobalt as byproduct) employs a general prosecutor, who sealed Kolwezi tailings, an action described by First Quantum as "illegal". The insane move on Kolwezi tailings has been long in the making, and was no surprise to anyone familiar with the story. The mining veteran - let's call him Jim Bender - says "it's sad that the government is intent on self destruction by taking precipitous action to destroy the two best projects in Katanga". The other one, of course, is the biggest copper mine in the DRC, Tenke Fungurume, where Freeport-McMoRan operates and holds 58.8%; Lundin holds 24.8% and DRC parastatal Gécamines (La Générale des Carrières et des Mines) the balance of 17.5%. The first phase at the mine cost US$1.8bn to build, and produced its first copper cathode earlier this year. Bender continues: "To gain First Quantum as an investor is a major asset to any developing economy. It is a successful and also honest operator. Its anti corruption stand in the early days of the upsurge in activities is an example to all investors. First Quantum has a unique ability to think laterally and develop projects without outside help. The group's stock price reflects this success. First Quantum will rightly pursue this in the courts and win". First Quantum and Freeport McMoRan continued their mine builds in Katanga Province during the great copper price slump, which commenced in mid-2008. Tens of thousands of artisanal miners were driven out of work. Bigger formal companies ran into cash crunches and had to take drastic action, as seen in the cases of Metorex, Katanga Mining, and Anvil; some, such as Camec, suspended mining, and other such as Africo halted plans to start building mines. Today, metal prices are at healthy levels, and an air confidence is returning, but First Quantum and Freeport McMoRan are taking severe punishment of a different kind. There are heavy knock-ons: First Quantum points out that the sealing of Kolwezi tailings means the loss of 700 jobs in the Kolwezi area, loss of tax revenues to the DRC government, and an indefinite delay in commissioning of the Kolwezi Project, targeted for May 2010. Where First Quantum holds 65% of Kolwezi, Gécamines holds 12.5%, the Industrial Development Corporation (IDC) of South Africa 10%, the International Finance Corporation (IFC) 7.5%, and the government of the DRC, 5%. When commitments were made in November 2007 to proceed with the development of the Kolwezi tailings project, First Quantum, the IDC and IFC were left alone to raise finance or procure third party debt project financing for Kolwezi. This is tough countryside for any mining company, and any individual. After becoming one of the world's wealthiest outlying nations during colonial rule, the country descended after independence into one hellpit after another. After the so-called second Congo war, from 1998 through 2003, peace accords assisted in ushering in a rush of foreign private capital aimed at recapitalising the wreckage of so many copper mines, rotting under the hellfroth of greed. Intermittent fighting continues to this day, mainly in the remote northeast of the country, where AngloGold Ashanti and Moto Goldmines hold valuable gold concessions and deposits that have not been mined for decades. AngloGold Ashanti and Randgold Resources recently agreed a joint venture deal to buy Moto Goldmines. To the south, Banro holds substantial gold concessions west of Bukavu, and wants to start building a mine at Twangiza. During the colonial era, Bukavu was known as the "African Riviera", and for very good reason as anyone who has been there would know. During the second Congo war, which saw more than 5m people prematurely meet their maker (outflanking the kill rate in the Second World War), mining continued, one way or another, down in Katanga Province, such is the richness of the ores. Given this week's events in and around Kolwezi tailings, Bender is worried that "the Tenke Fungurume story has not yet unfolded, but it could become the same thing on a larger scale. Frightening". There were strong rumours heard by Katanga insiders during April that Tenke Fungurume would be shuttered in six month's time, which is now not far away. First Quantum has deeper roots in this part of the world. First Quantum had acquired Bwana Mkubwa, on the Zambian side of the copperbelt, in 1996. The grand old man exhausted the last of its own ore reserves in mid-2002; those "reserves" in any event were poor quality tailings from previous operations. The mine had been worked on and off since its discovery in 1902. So tattered and torn was Bwana Mkubwa that First Quantum's acquisition was a straight commercial deal. The mine's state of dereliction and apparently hopeless future left it outside the mandate of the copper industry privatisation initiated by the Zambian government. First Quantum, headed to ore reserve starvation from when it bought Bwana Mkubwa, "rediscovered" Lonshi, just over the DRC border, in 2000. The small, rich, deposit had first been found by Belgian geologists in the 1930s, but had never been worked. First Quantum sunk the first modern drill holes into Lonshi in November 2000, and commissioned the US$25m mine just eight months later. Lonshi was the first greenfields copper mine built on the copperbelt in 33 years. First Quantum also built the next one, a very big one, Kansanshi, at a deposit known since 1899, in Zambia. But make no mistake, these were rotten times for the copper price. In 2002, Anglo American quit Zambia Copper Investments (ZCI) and its main interest, Konkola Copper Mines, at a cost of US$34m in addition to a US$353m write-off taken in 2001. The smart guys at First Quantum soldiered on. In mid-2006 I found myself bundu bashing with First Quantum, and it was on the road to Lonshi that I met Prince Marvelous. I was told that he had nine wives, but did not have time to meet them all. He would strike anyone as fearless, and keeping up with nine wives was evidence that he was fearless. His palace stood just off a dusty but solid laterite road just before the Lonshi border crossing. Prince Marvelous had every reason to be confident, standing as he was atop a gigantic unmined copper-cobalt deposit that could one day underpin his ascendancy to the throne of the King of Africa. He was standing on the Central African Copperbelt, which extends some 500km through Zambia and into the DRC's Katanga province. The belt is around 50km in width. The copperbelt hosts one of the world's greatest contiguous mineral deposits, and many decades ago, settlements like Ndola and Kitwe in Zambia, and Lubumbashi across the border, were among the wealthiest in the world. All the while, the 40-ton Volvo trucks went on, thundering down the road past the dreamy Prince Marvellous. The huge trucks ran "hot," with two drivers working consecutive 12 hour shifts, seven days a week, hauling ore 36km from Lonshi to Bwana Mkubwa. But if it was going to be much of a story, then it must mention that First Quantum acquired mining rights for Lonshi in 2000, but it was only in mid-January 2003 when First Quantum acquired inalienable rights under the new Congolese Mining Code. The formulation of the code, regarded as truly world class, was heavily sponsored by the World Bank. Those were the days, all right. Back in the present tense, Bender continues: "In all my time here I have not seen the government get involved in its responsibilities, such as building roads, providing electricity and water, and so on. The mining companies have to do all of this, as well as build their plants. The border, through which all of the thousands of trucks have to pass with construction inputs and the metal exports, is widely recognized as the most corrupt and obstructive in the world". Bender is referring, of course, to Kasumbalesa (sometimes "Kasile"), less than 100km south-south-east of the Katanga Province capital, Lubumbashi. In times gone by, Lubumbashi was connected by rail to the deep south, to Johannesburg, and on to Durban or Cape Town, or even Maputo. It was also connected via the Benguela system to the west to the port of Lobito in Angola. It is via the Katanga link that the Benguela system also connects east through exchanges in Zambia to further connections to Mozambique's port of Beira, and also Tanzania's Dar es Salaam, both on the Indian Ocean. Today, the Benguela rail system would cost tens of billions of dollars to build from scratch. Today, the railroads are frugal skeletons of a long forgotten glorious era. Today there is only Kasumbalesa, with its filth and grime and corruption and abject hopelessness, a tollgate into and out of hell, teeming with devils. "This is not an enabling environment", states Bender, "quite the contrary. My time in the DRC is drawing to a close. I shall remain in contact with the DRC as a consultant to a civils company". You may wonder where a somewhat disillusioned Bender is off to. Well, here it goes: "I am heading back to Zimbabwe where I hope to develop a gold mining business". And perhaps that says it all; hell comes in big packages, but some are smaller than others. Farewell, Katanga. -END- | |
| September 16, 2009 MORE RUMBLINGS IN THE CONGO - First Quantum suspends Kolwezi Publisher: MineWeb Author: Barry Sergeant | |
| Leading African copper-gold accuses the Democratic Republic of the Congo of "illegal" actions over US$593m mine, now 65% complete. JOHANNESBURG - African copper-gold miner First Quantum on Wednesday announced suspension of the build of the Kolwezi tailings copper mine in the Democratic Republic of the Congo, following actions taken by authorities characterised by First Quantum as "illegal". Heat around the US$593m mine, 65% owned by First Quantum, and currently described as 65% complete, started rising many months ago in the bent crucible of the so-called mining contracts "revisitation" review process initiated by the DRC. The review of most contracts has been concluded, barring that for Kolwezi tailings, and also over the biggest copper mine in the DRC, Tenke Fungurume, where Freeport-McMoRan operates and holds 58.8%; Lundin holds 24.8% and DRC parastatal Gécamines (La Générale des Carrières et des Mines) the balance of 17.5%. The first phase at the mine cost US$1.8bn to build, and produced its first copper cathode earlier this year. As for the Kolwezi tailings project, a syndicate of commercial and development banks were mandated in early 2008 to provide a US$450m facility for the US$593m project. Earlier this year, such banks reaffirmed, according to First Quantum, "that, subject to a satisfactory outcome to the revisitation process being conducted in the DRC, they are prepared to provide the financing subject to completion of documentation and standard conditions precedent for a facility of this nature". The project debt, when available, would be used to repay the funding provided by First Quantum to date. First Quantum reduced cash outflow to the project during the first quarter, pushing out commissioning to the second quarter of 2010. First Quantum raised US$500m in fresh equity on 28 May this year, following an earlier capital call in April when it completed an equity issue of 9.3m new shares, raising CA$346m. The group's cash flows were impacted by lower copper prices, and its capital expenditure demands at various existing and new projects. First Quantum renewed a US$250m corporate revolving loan in January this year. Where First Quantum holds 65% of Kolwezi, Gécamines holds 12.5%, the Industrial Development Corporation (IDC) of South Africa 10%, the International Finance Corporation (IFC) 7.5%, and the government of the DRC, 5%. When commitments were made in November 2007 to proceed with the development of the Kolwezi tailings project, First Quantum, the IDC and IFC were left alone to raise finance or procure third party debt project financing for Kolwezi. First Quantum owns and operates 80% of the Kansanshi copper-gold mine in Zambia ("a foundation asset"), 95% of Frontier in the DRC, the group's newest mine, 80% of the Guelb Moghrein gold-copper mine in Mauritania, 65% of the developing Kolwezi copper-cobalt project in the DRC, and, among other interests, exploration assets, including the Kevitsa copper-nickel-cobalt-gold-platinum-palladium project in Finland. Concerns remain over Tenke and the position of Freeport-McMoRan, the world's biggest listed copper producer, biggest molybdenum miner, and a leading gold digger. In April, it was no secret that the Tenke Fungurume copper cobalt mine had been threatened with a shut down in six month's time. Whether this was true or not, the atmosphere remains dark and cold. More than a few fingers have been pointed at Gécamines mandarin Paul Fortin, who is openly accused of holding a xenophobic position. It is open knowledge that Freeport-McMoRan negotiated every detail of the Tenke Fungurume agreement over several years, with Gécamines. The negotiations took place after the latest Congo war; indeed, the final documents have the authority of being formalised under a democratically elected government environment. First Quantum summed up its official viewpoint today: "The company and the Kolwezi Project's other contributing partners, the IFC and the IDC, remain firmly of the view that the DRC government's actions have no legal basis. While the company is preparing to file for International Arbitration pursuant to the contract of association, it will continue to seek an alternative solution to the claims, which have resulted from the mining contract revisitation process, and will provide further updates as warranted". First Quantum "regrets that the suspension will result in the immediate loss of approximately 700 jobs in the Kolwezi area, loss of tax revenues to the DRC government, and an indefinite delay in commissioning of the Kolwezi Project, which was targeted for May 2010". -END- | |
| September 02, 2009 Volatility forecast for 2010 cobalt supply, prices Publisher: purchasing.com Author: Tom Stundza | |
| New LME cobalt contract could add to unpredictability Buyers may see erratic and volatile supply of cobalt in coming months as the U.S. government and a major world producer abandon the market and the London Metal Exchange (LME) begins spot and futures trading early next year. That's the view of Paul Helsel, partner and founder of Pittsburgh-based Phoenixx International, speaking at an Institute of Scrap Recycling Industries (ISRI) conference last week in Farmington, Pa. Cobalt is used in numerous diverse commercial, industrial and military applications--ranging from rechargeable battery electrodes to superalloys--many of which are strategic and critical. Spot cathode sold in the U.S. in August averaged $20.03/lb, according to calculations posted on Purchasingdata.com, as the metal has progressed upward from a cyclical low of $14.25 in March. More than 80% of cobalt used in the U.S. is imported, which may increase in 2010 since the U.S. Defense National Stockpile Center is down to 600,000 lb in inventory, compared with 96 million lb at the peak in 1992. The stocks "will be depleted by the end of this calendar year, or certainly within 6 months," Helsel tells the ISRI conference. "That throws out a big swing supplier." The global market is bound to be affected by BHP Billiton's withdrawal from the cobalt market, Helsel says, since it will leave Switzerland's Glencore International, which markets other material for remaining cobalt ore processor Xstrata, in control of a lot of the high-grade cobalt. BHP Billiton last week announced its withdrawal from the cobalt spot market, following the end of its tolling agreement with Xstrata. "That, along with the LME, could be a recipe for extreme volatility," Helsel says, referring to the imminent launch of cobalt trading on Feb. 22, 2010, and the need for the market to obtain sustainable and stable liquidity. Helsel worries that the first few months of trading will show a decoupling the LME futures and the physical spot markets. Atop all that, Platts Metals Week newsletter reports that Zambia's cobalt producer, Chambishi Metals, is postponing the resumption of cobalt production indefinitely until there is further improvement in the price of cobalt to between $24 and $30/lb. The company shut the cobalt plant in December 2008, following a slump in the world price of cobalt below $10/lb. Until its shutdown, Chambishi Metals was Zambia's largest producer, producing 3,500 metric tons/year. Production had been due to restart in July but has been delayed and now postponed, according to CEO Derek Webbstock, who says it would not make sense to resume production when the world price remains low. Platts says this week's 99.8% high-grade cobalt price is $21.50/lb delivered to the U.S. -END- | |
| August 26, 2009 Cobalt poised for gains as six-week rally in FeMo, moly oxide ends Publisher: MetalBulletin.com | |
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| August 20, 2009 Cobalt supply deficit to give Sherritt boost Publisher: Financial Post Author: Michael Taylor-Reuters | |
| The global market for battery material cobalt will slide into a deficit next year, as rising demand and stalled production projects boost prices, Sherritt International says. Martin Vydra, managing director at Toronto-based Sherritt International, predicts a cobalt deficit of between 1,000 and 3,000 tonnes in 2010. "I believe that pricing is starting to now track supply and demand and that there is more room to go up," Mr. Vydra said yesterday. Refined cobalt consumption in 2008 was estimated at about 60,000 tonnes, while total cobalt supply was at about 55,878 tonnes in 2008, says the Cobalt Development Institute. Sherritt International, whose main assets are in Cuba, Canada and Madagascar, sells cobalt to offset nickel mining costs. Sherritt produced a record high of 3,573 tonnes of cobalt in 2007 and 3,428 tonnes in 2008 and is looking to top last year's figure in 2009. "We are the lowest-cost producer," Mr. Vydra said. "We are also the last supplier to be dropped by a consumer when they are cutting back. "We do hear from consumers idling production or being careful with inventories in the past [but they] are now more confident that they can build inventories because their order books are full." He said the rechargeable battery and super alloy industries were showing real signs of recovery, with more enquiries coming through from spot customers during the second quarter. "When cobalt was $11/$12, you had a lot of buyers out there sitting on the fence but didn't want to jump in unless they knew it had hit the bottom," Mr. Vydra said. Prices for high-grade 99.8 cobalt fell as low as $12 a pound in December, down from levels above $52 a pound in March last year. A byproduct of both copper and nickel mining, cobalt is used to make aircraft engines and batteries for hybrid cars and is currently traded at about $19.25 a pound. Mr. Vydra also said Sherritt's Ambatovy nickel project in Madagascar, which is currently under construction and expected to be fully operational at the end of in 2010, will bring an additional 5,600 tonnes per year of cobalt to the market. "We will be probably the largest cobalt producer on the market," Mr. Vydra said. -END- | |
| August 19, 2009 Global cobalt mkt faces deficit in 2010-Sherritt Publisher: Reuters Author: Reporting by Michael Taylor; editing by Keiron Henderson | |
| LONDON, Aug 19 (Reuters) - The global market for battery material cobalt will slide into a deficit next year, as rising demand and stalled production projects boost prices, Sherritt International told Reuters. Martin Vydra, managing director at Toronto-based Sherritt International S.TO, predicts a cobalt deficit of between 1,000-3,000 tonnes in 2010. "I believe that pricing is starting to now track supply and demand and that there is more room to go up," Vydra told Reuters in an interview. -END- | |
| August 05, 2009 The New LME Cobalt Contract Publisher: MetalMiner Author: Stuart Burns | |
| The New LME Cobalt Contract August 5th, 2009 The LME is due to launch their Cobalt contract shortly. Cobalt and molybdenum will be the first new metals introduced onto the exchange since steel last year but may bear more of a resemblance to aluminum introduced in 1978 or nickel in 1979. When those metals were launched there was considerable resistance from the industry. The producers in particular resented the threat to their "right" to set a market price, the producer price, and felt the volatility would be damaging for everyone. Cobalt has met no such resistance. The LME has worked to garner wide support from producers, consumers and the trade, and have largely been successful. The contract specifications at 99.3% purity and higher in industry consumed forms such as cathode, briquettes and powder, and traded in one ton lots packed in drums mean contracts are directly applicable to what the industry uses. Delivery points will be Rotterdam, Baltimore and Singapore according to a report given to the recent Lisbon Cobalt conference given by the LME so there is a good geographic spread for suppliers and consumers looking to take or make physical delivery. Cobalt is not a volume product. Only some 60,000 tons per annum are traded worldwide according to the Cobalt Development Institute website. The biggest concern was whether sufficient liquidity could be generated to establish a price that was fair and representative of true supply and demand. Some comfort has been taken by the success of the Credit Suisse and Glencore Cobalt Index which has proved to be well accepted and free from manipulation. In some respects, the size of the market and limited number of players is itself a barrier to manipulation. As one industry insider commented to us, if any party takes up a sizable position on the exchange they are at considerable risk if they have to unload quickly. The cobalt market will not be as liquid as copper or aluminum. Large positions cannot be built up without the exchange authorities getting sight of it and more importantly cannot be unloaded quickly. There will just not be enough buyers to sell to. Furthermore markets like cobalt are not beyond physical manipulation anyway as happened with the Zambian market in the early 90's. Indeed the chances of physical manipulation are probably higher than on a futures exchange. Others are concerned that a futures exchange will introduce more speculators into what has been a relatively minor and almost totally physical market up to now. It's true to say the major market makers will want to see greater volatility, that's when they traditionally make their money, but the market cannot exactly be said to have been dormant over the last few years even without a futures market. The price has displayed all the volatility seen in other base and minor metals throughout this decade and will likely continue to do so with or without the LME. What the exchange will provide is a more transparent price, hitherto the industry has relied largely on the Metal Bulletin price which is believed by many to have been distorted in the past and is not widely respected by market players. Although the new market will allow producers and consumers to hedge their forward sales and purchases, the greatest beneficiaries will probably be the smaller processors in between who will be able to hedge the exposure on their work in process. This folio management should significantly reduce the risk smaller players will face, allowing them to lock in their profit and making the processing market generally more efficient. So the new contract looks like it should be well received when it comes to the market next year. We will watch with interest how it is taken up by market players and the degree to which industry participants feel it strengthens their risk management strategies. Stuart Burns -END- | |
| July 22, 2009 Formation Capital Gets Ever Closer to Production at the Idaho Cobalt Project, In Spite of the Actions of Xstrata Publisher: Minesite.com Author: Charles Wyatt | |
| Formation Capital Gets Ever Closer To Production At The Idaho Cobalt Project, In Spite Of The Actions Of Xstrata By Charles Wyatt Mick Davis asserted during his after-dinner speech to the Melbourne Mining Club at Lords Cricket Ground that Xstrata gives maximum autonomy to its operations around the world. But there is a danger that this can prove to be a two-edged weapon. Back in 2002 Xstrata closed the Windimurra vanadium mine in Western Australia where it was in a joint venture with Precious Metals Australia. Bad enough to have to close a mine with all the redundancies that implies, but the major also started to dismantle the plant without the agreement of its partner. Roderick Smith, who was running Precious Metals at the time, fought back through the courts and managed to stop Xstrata from removing the kiln and a lot of other equipment. He also came away with a cheque for A$24 million. That equipment, worth several hundred million dollars, was key to subsequent attempts to resuscitate the mine, which got underway in 2008. It is impossible to know if Xstrata's head office was asked if the plant should be dismantled, or whether the decision was taken independently at a local level. But dismantling the plant would hardly be disadvantageous to Xstrata, given that it also produces vanadium in South Africa, and product from that operation would be more likely to fetch a higher price if Windimurra vanadium was unlikely to hit the market any time soon. It's perhaps more likely that the local management made its own decision, but Mick Davis would certainly have known about it when he had to sign a cheque for A$24 million. Autonomy is a great thing, but local managers still have to be kept on a strong leash. And fast forward to 2009, and a similar thing seems to be happening in Idaho, only this time round the bill could be even higher if it can be proved that the local management is in breach of anti-trust law. Anti-trust law in the States is pretty lethal. It was created to prevent monopolies and break up giant corporations like Standard Oil. The philosophy behind the laws is that trusts and monopolies can cause markets to stagnate by preventing others from engaging in healthy market competition. The fines can be mind-boggling, so it is difficult to understand why Xstrata US is tempting fate by trying to prevent the Canadian-listed company Formation Capital getting access to its Idaho cobalt project, other than to say that the Idaho project will be the first primary producer of the metal in the States. Xstrata is the minority partner in the old Blackbird minesite, which lies close to the Idaho cobalt project, and which is undergoing restoration and through which Formation Capital needs access. In January of this year the US Department of Agriculture, US Forest Service handed down a Record Of Decision which meant that the cobalt project could go ahead. But appeal against that decision was lodged three months later by Xstrata, despite the fact that Rio Tinto, the majority partner in Blackbird, decided not to join in. Such an action seems mighty strange, until one remembers that Xstrata owns the Nikkelverk refinery at Kristiansand in Norway which has the capacity to process 86,000 tonnes of nickel, 39,000 tonnes of copper cathodes and 5,200 tonnes of cobalt annually. Most of that cobalt is sold to the US where it is considered to be a strategic material. The view is that cobalt is a commodity whose lack of availability during a national emergency would seriously affect the economic, industrial, and defensive capability of the US. Until the Idaho cobalt project comes into production the US will be importing virtually all its cobalt requirements, and a goodly slice of that is coming from Nikkelverk. When the Idaho cobalt project gets into production it should be producing 1,525 tonnes per year of super-alloy grade high purity cobalt metal for a minimum mine life of ten years. Not hard to see why somebody somewhere might think they were doing a big favour for Mick Davis, sitting safe and sound back in Zug in Switzerland, by holding up development at the Idaho project as long as possible. The anticipated level of production at Idaho is equal to 3.3 per cent of the entire global cobalt supply and it will be able to meet no less than 15 per cent of the North American demand for cobalt. As the Idaho project would be on home territory it does not require a brain surgeon to deduce that those 1,525 tonnes per year will be sold at home and US import requirements will fall by that amount. Should be plenty to go round, one might think, as the US only consumes 20 per cent of world production, but that may not be how it appears to someone somewhere along the chain of command who's trying to make an impression in Zug. This hold up is yet another frustration for Mari-Ann Green, chief executive of Formation Capital, and she has encountered plenty of these in her efforts to bring the cobalt mine into production. How ironic then that it is another mining company that is chuntering on about environmental impact rather than the usual band of tree huggers. They have actually been won over by Mari-Ann who has gone out of her way to counter every objection by explaining exactly what the project involves. Her policy of meeting every problem head-on has taken the Idaho cobalt project to the point where funding is the next big hurdle to be crossed. According to Mari-Ann, plenty of interest is being shown by financiers and talks are in progress about a number of funding methods, including partnerships and off-take agreements, debt and equity. The aim is still to start construction this autumn and it will take a year after that before production is ready to start. Women usually get what they want in the end, so Mick Davis's minions would be best advised to step aside. -END- | |
| July 16, 2009 Cobalt targets higher prices Publisher: Metal-Pages | |
| LONDON (Metal-Pages) 16-Jul-09. The rally in cobalt prices is showing no signs of abating yet, and the market took heart from the decision by China's Jinchuan Group to raise prices for its materials midweek. Asia's largest producer hiked its website prices for both cobalt and nickel this week. It is currently offering Rmb 335,000/tonne ($22.29/lb) for 99.8% cobalt metal, up from Rmb 310,000/tonne ($20.62/lb) which had been in place since 3 July. Nickel has meanwhile made some cautious gains on the LME, with an eye on copper, which is trading higher and in backwardation, and on the strike at Vale Inco's nickel mine in Sudbury, which began this week. Market sources said that Jinchuan Group has informed customers that it is planning to shut down for maintenance in August, in a move linked to supply shortage of raw material, although the company has been reluctant to comment on production plans. The producer is due to receive intermediary feedstock, cobalt hydroxide, from the Tenke Fungurume mine in the Demoratic Republic of Congo towards the third quarter of the year. In the meantime prices for cobalt concentrates in the spot market are being reported upwards of $ 13/lb. There are still opportunities for arbitrage to China, with domestic metal prices at a premium to western markets, but business has been active and prices going up also in the western. Prices for high grade cobalt breached through $ 19/lb in Europe towards the end of the week, and some small business for Falconbrige material was reported above $ 20/lb in the US. Zambian material and 99.6% grade was reported trading close to $ 18/lb, with 99.3% cobalt trading between $ 17/lb and $ 17.75/lb. Japan has emerged back into the market recently, and is retendering for metal for the stake stockpile, having failed to conclude purchases at satisfactory prices last month. -END- | |
| July 13, 2009 BNN Interviews President of Equities and Economics Report Publisher: BNN Author: Interviewer: Amanda Lang | |
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- For the Information of Shareholders and Interested Parties Only - Dear Shareholder/Interested Party, The image below provides a link to an interview on July 10, 2009, with Victor Goncalves, President of Equities & Economics Report (www.enereport.com), by BNN's Amanda Lang. At the 4 minute mark, Mr. Goncales resopnds to an email enquiry regarding Formation Capital Corporation and its Idaho Cobalt Project.
 Click Here for BNN Interviews Victor Goncales of Equities & Economics Report Formation Capital Corporation | |
| June 10, 2009 Illegal Mining of Cobalt in the Congo Publisher: CNBC Author: Erin Burnett | |
Click on image below to view CNBC's story on the illegal mining of cobalt - "Cobalt and the Congo - Dollars and Danger" Formation Capital Corporation's Idaho Cobalt Project is expected to supply North America with a stable source of cobalt offsetting the current reliance the United States has on foreign sources such as the Congo. Once in production, the ICP will be the sole primary cobalt producer in the Western Hemisphere. The Company trades on the Toronto Stock Exchange under the symbol FCO. The link to CNBC's report is also provided here below: http://www.cnbc.com/id/15840232?video=1148104078&play=1 | |
| June 02, 2009 Canada could become big player in electric cars industry, says Magna Publisher: The Canadian Press Author: Julian Beltrame | |
| OTTAWA - Magna International Inc. chairman Frank Stronach says he wants to start mass-producing electric cars in Canada within three years. The head of Canada's largest auto parts maker was in Ottawa on Tuesday seeking government support for his new electric vehicle venture after Magna cemented a deal with General Motors Corp. to acquire the U.S. automaker's money-losing Opel car brand in Europe. Unveiling the fully electric compact that Magna developed in partnership with Ford Motor Co. (NYSE: F), Stronach said he is being courted by the U.S. and Europe but he wants his first electric cars to come off a Canadian assembly line. "We are very serious, we have a serious commitment," he told reporters. "I would like to see that the first electric car facilities are in Canada. If we would get a loan at a reasonable rate, we know we could speed it up, we would make sure it will be in Canada." If successful, an electric car assembly operation in Canada would provide badly needed jobs in a troubled industry and help the global parts giant cash in on the growing demand for low-pollution vehicles in the marketplace over the next few years. Toyota, with its Prius, and Honda, with its new Insight, already have hybrid electric-gasoline cars, and General Motors plans to mass produce its new Volt fully electric vehicle at a U.S. plant and get them into dealer showrooms by the end of 2010. The world's former No. 1 auto maker filed for bankruptcy protection on Monday - the largest ever for an industrial company - and said it hopes to move forward with just four core brands - Chevrolet, Cadillac, Buick and GMC. It also plans a spate of new fuel-efficient and low-polluting models, including the Volt, a critical piece of GM's vehicle lineup for the future. GM experimented but failed with electric cars in the past. However, the Volt is seen as a sure-fire winner by the Detroit company, especially in a future market of younger buyers worried about soaring gasoline prices and greenhouse gas emissions. The Volt is an extended-range all electric vehicle with a powerful battery pack that uses cutting-edge lithium-ion technology. The vehicle also has a small gasoline engine to replenish the battery power when it gets low, not to drive the car. Stronach said he believes within six years about 15 per cent of cars sold will be electric or the hybrid variety, with the percentage doubling by 2021. An official with the Aurora, Ont. parts maker, which employs 74,000 people in 25 countries, said the model being developed with Ford is aiming for a 160-kilometre range without recharging. Magna (TSX: MG-A.TO) is putting in about $300 million into the project and is seeking low-interest loans from the federal government for about half the total cost. But Stronach came to Ottawa without any guarantee he would be seeing Prime Minister Stephen Harper, although he said he hoped to arrange a meeting. The electric vehicle is a major step by Magna to diversify its business away from auto parts, a sector hit hard by the slump in GM, Ford and Chrysler, Magna's main customers. Besides electric vehicles, Austrian-born Stronach wants to expand Magna's vehicle assembly operations and use the Opel deal to boost sales to Russia, which could soon become Europe's largest car market and help Magna decrease its dependence on North America. Magna has also been looking to other customers like Volkswagen, BMW and Toyota. Saturday's Opel deal calls for Magna to take a 20 per cent stake in the German company and for state-controlled Russian lender Sberbank to take a 35 per cent stake, giving their consortium a majority. GM will keep 35 per cent, while the remaining 10 per cent will go to Opel employees. The Magna chairman appeared less certain about whether any of Opel's European-based manufacturing plants would be transferred to Canada, suggesting a sticking point is an agreement with GM not to sell Opels in the U.S. market. Last week, Stronach said he wants to build Opels in Canada, but although he repeated that wish Tuesday, he suggested availability to the larger U.S. market is essential before the company could make that commitment to manufacture in Canada. "I'm very optimistic we can sit down and work out concepts and structures which would be beneficial to GM and to Magna and also to Canada," he added. Stronach described the global auto market as extremely competitive, but said he believes the Opel unit will break even in three years and turn a profit in four years. In another matter, he called the massive bailouts of GM and Chrysler as necessary, given the jobs at stake and that the car companies were adversely impacted by the global recession. "If it were only the car industry and the rest of the world economy was functioning, then it wouldn't have been right to bail out the car companies," he said. "But if they had gone bankrupt and were sold in bits and pieces, the spinoff effects would have been a few million jobs (lost) between Canada and the United States." Stronach, whose company runs mostly non-union plants, said he has one major concern over what he called the "confrontational culture" that exists between management and unions in the North American auto sector. He said that culture has greatly handicapped the industry. -END- | |
| March 30, 2009 China's '09 cobalt demand to rise 3-4 pct -- refiner Publisher: Reuters Author: Polly Yam | |
| Wed Mar 25, 2009 5:49am EDT By Polly Yam HONG KONG, March 25 (Reuters) - China's consumption of cobalt is expected to rise at least 3-4 percent this year because of strong demand from cellphone batteries, even though demand from other sectors may fall in the face of the global economic slowdown, an official at a refiner said on Wednesday. But output may fall this year as low prices are discouraging producers from running full rates, which could cut exports from China, the world's top producer and consumer of cobalt. China consumed 5.3 percent more cobalt at 13,519 tonnes last year, nearly a quarter of world demand, said Yang Zhai, marketing manager at Zhejiang Huayou Cobalt Co Ltd. "Consumption should rise by more than 3-4 percent as demand from cellphones increases, particularly with the development of the 3G," Zhai told Reuters at the sidelines of a minor metals conference in Hong Kong. Production of lithium cobalt oxide, which is used in batteries for cellphones, would rise by more than 5 percent this year from 5,478 tonnes last year, he predicted. That demand had taken up nearly half of China's cobalt consumption. To develop China's new third generation (3G) mobile networks, the government has estimated that the country's three telecom carriers would spend $58.5 billion over the next three years. [ID:nPEK22716] With the expansion in 3G networks, ZTE Corp (0763.HK)(000063.SZ), the world's sixth largest cellphone maker, aims to raise revenue by a double-digit percentage this year. [ID:nHKG280880] Zhai said cobalt demand from the production of a catalyst, which was used in an oil product called purified terephthalic acid (PTA), would rise as oil prices stablised. Demand from the sector, which accounted for 6 percent of the country's total consumption of cobalt, fell 29 percent to 950 tonnes last year due to sharp falls in oil prices. FALLING OUTPUT But production of cobalt may fall this year from 20,000 tonnes last year, a third of the world's output, as producers have slowed or shut production on weak prices of the metal, Zhai said. He estimated about 6,000 tonnes of cobalt stocks had been carried to this year. Spot refined cobalt with purity more than 99.6 percent traded at about 305,000 yuan per tonne in Shanghai on Wednesday, down 63 percent from a year earlier but up 9 percent this year. Spot cobalt cathode COB-CATH-LON in London is trading around $16 per pound, down from more than $46 in the first half of last year. China would continue to rely on imported material as feed for the production of refined cathode as local mines produced about only 1,000 of metal this year, he said. But the firm would increase refined cobalt production to up to 3,600 tonnes this year from 2,800 tonnes last year after it boosted capacity by two-thirds to 5,000 tonnes a year, Zhai said. -END- | |
| March 18, 2009 Xstrata opposes Formation Capital cobalt project on environmental grounds Publisher: Northern Miner Author: Kip Keen | |
| Vancouver - Rarely do mining companies make headlines for objecting to a competitor's mine development based on its potential environmental impact. But in a strange twist to the saga of Formation Capital's (FCO-T, FCACF-O) environmental approval process of its Idaho cobalt project (ICP) - where the company has been able to bring onside environmental groups and First Nations with commitments not to oppose the project - Xstrata (XSRAF-O, XTA-L) has become one of only two objectors to the U.S. Forest Service's positive record of decision on the project's environmental impact statement through an ongoing appeal process. The other appeal came from an individual named Charles Pace. The dispute is one between neighbours over the potential impact of the ICP on local waterways that has reached the point of Formation Capital alleging Xstrata may be trying to block the development of the ICP to protect the Swiss-based major's near-monopoly on the global high-purity cobalt market of which Formation Capital says Xstrata controls 85%. But Xstrata maintains it is only protecting its interests next door to the ICP at the past-producing Blackbird mine - an EPA Superfund site - where, along with a Rio Tinto (RTP-N, RIO-L) subsidiary, it has spent over US$70 million on remediation through three of its wholly owned subsidiaries: Noranda Mining, Noranda Exploration and Blackbird Mining. The Blackbird site also happens to be downstream of the ICP and Xstrata says it doesn't believe that Formation Capital's environmental impact statement addresses Xstrata's concerns that it could end up being on the hook to clean-up potential pollution from the ICP. The ICP, located 45-km west of Salmon, Idaho, would be an underground mine, with proven and probable reserves of 2.6 million tonnes grading 0.559% cobalt, 0.596% copper and 0.4 gram gold per tonne, and provide ore to Formation Capital's hydrometallurgical facility 250-km away near Kellog, Idaho, where the company would produce about 1,525 tonnes of high-purity cobalt per year, making them direct competitors to Xstrata. Dominique Dionne, Xstrata vice-president of corporate affairs in the company's Toronto-based nickel division, tasked with responding to Formation Capital's allegations following The Northern Miner's inquiries to one of its attorneys in Idaho, says the appeal is not intended to prevent the ICP from proceeding. "It is intended to protect the money that has been spent, more than US$70 million, by Noranda and others, to remediate the Blackbird mine and the streams in that area," she says. "The streams and the water quality and the fish populations and the waterways have been re-established, so that's a done deal. The appeal is really to protect that, in the view of the potential impact of any new development on these waterways." But E.R. Honsinger, Formation Capital vice-president corporate communications, suspects Xstrata may have ulterior motives. He notes that the other major stakeholder at Blackbird has not appealed the record of decision and, further, that it and Formation Capital are working out any potential issues through talks. "I think the environmental record (of decision) speaks for itself," he says. "We spent a lot of time working on this and there is virtually no environmental opposition to this project because we've done everything we can to mitigate any of those concerns." He argues Xstrata does not "have any environmental legs to stand on" as regards the issue of potential downstream impacts. Not only have local groups, including the Idaho Conservation League and a First Nation band, agreed not to oppose the mine's development, Honsinger notes, but the U.S. Forest Service has signed-off affirmatively on its environmental impact statement. "The only thing we can read between the lines here is that it would appear that through (Xstrata's) actions that they are (a) either using us as a potential soapbox to try and get out of all of their cleanup responsibilities or (b) they're trying to corner the market, the cobalt high-purity market." Dionne declined to respond to those allegations. Honsinger, noting current troubles in the Democratic Republic of Congo where Xstrata operates, theorizes that part of the problem in getting a resolution to the dispute may also be that Xstrata "has bigger fish to fry". But he says: "They should be aware of what's going on down in this smaller 'minion here of Salmon, Idaho. And it just doesn't appear to be the case." Back at Xstrata, however, Dionne defends the company's stance on the ICP. She explains that Xstrata only wants to make sure Formation Capital's environmental impact statement explicitly addresses potential impacts to the Blackbird property and she says the company is not fundamentally opposed to there being a new cobalt mine next door. Putting it bluntly she says the ICP's environmental impact statement as it currently stands would not protect Xstrata and its subsidiaries at Blackbird from potential problems upstream. "The thing is, the way it's been done now, we would be exposed," she argues. Both parties state a desire to resolve the matter through negotiation but Honsinger and Dionne relate discordant accounts as to how much of an effort the companies have made to resolve the cross-fence dispute. Dionne says there have been several meetings and constant conference calls with Formation Capital. "We've been working with them and our only interest is to protect the $70 million that has been spent on this," she says. But Dionne's description of regular contact between the companies incenses Honsinger who stresses that he would like nothing more than to meet and resolve the issue with Xstrata but that Formation Capital's calls to the Major have gone unanswered. It's why Formation Capital is making the matter as public as it is, he says. "Their contact with us has been extremely limited," Honsinger says, adding, "Their legal counsels' filing of appeals and so on has been extensive." As for the appeals, Kimberley Nelson, the U.S. Forest Service ranger currently overseeing their assessment, says the U.S. Forest service will announce its decision regarding them on April 30 after the regional forester receives her department's recommendations. Dionne says Xstrata is seeking meetings with the U.S. Forest Service and the U.S. Environmental Protection Agency (EPA) "to make sure that there will be a distinction between the historical effects of the mining and the new impacts that could take place on the waterways." Her understanding at this point is that the meetings have been requested "and we're waiting on that," she says. But, while the U.S. Forest Service considers the appeals, Xstrata's influence, or Formation Capital's for that matter, will be limited. "We do not consult with them during the appeal process," Nelson says. Thus at this point the resolution ultimately appears to be out of either company's hands. -END- | |
| February 16, 2009 EPA issues permit for ID cobalt mine project Publisher: Associated Press | |
| A Canadian company proposing to mine high-purity cobalt from a mountain in central Idaho now has the federal permit required to discharge treated wastewater into a tributary of the Salmon River. The Environmental Protection Agency issued the permit this week [see Formation Capital News Release Feb 11, 2009] for the Idaho Cobalt Project, planned on public land mined off-and-on since the late 1800s for cobalt, silver and copper. Securing the discharge permit was a major federal step for Formation Capital Corp., the Vancouver, B.C.-based company seeking to open the first domestic cobalt mining operations in decades. "The receipt of this permit is a substantial milestone," said Guy Jeske, general manager for the Idaho Cobalt Project. "The terms and conditions of the permit are consistent with what we expected and we have no doubt that we can comply." The company anticipates extracting from two underground shafts as much as 1,600 tons annually of high-grade cobalt, a key component in the construction of jet airplane engines and batteries for hybrid and electric vehicles. The proposed mine is located in the Salmon-Challis National Forest, 22 miles west of Salmon, on land partially shared with the historic Blackbird Mine, the site of a federal Superfund cleanup and blamed for destroying salmon runs along a tributary of the Upper Salmon River watershed. The company expects to mine for at least 10 years, hire about 150 full-time employees and add about $15 million each year into the state and local economies. -END- | |
| February 05, 2009 Boom in battery sector anticipated Publisher: Metal Pages | |
| LONDON (Metal-Pages) 03-Feb-09. In spite of the global economic downturn and dearth of sales in the automobile sector there are reports that a boom in the battery sector is expected with the prospect of a strong growth in sales of electric cars. As a result electronics companies are making vast investments in battery plants. Leading Japanese electronics companies such as Toshiba and GS Yuasa have announced plans for new battery plants, although the industry is cutting capital investment overall. Ryoji Chubachi, President of Sony announced a list of factory closures, but the one area where he promised growth was batteries. "Nobody wants to be left out and nobody wants to lose existing market share," said Donald Saxman, an analyst at BCC Research. Fuji Keizai, a research company, expects the market for rechargeable lithium-ion batteries to more than double to ¥1,255 billion ($14bn) between 2007 and 2012, and the overall battery market to grow by some 37 percent. Industry analysts give three reasons for this. First is the growth in mobile devices, from laptop computers to Apple's iPhone. The second is the "green" drive for hybrid or fully electric cars, all of which will need a large battery, and the third is the potential use of batteries to store renewable energy generated by turbines when the wind blows, or solar panels when it is sunny, and then release it as conditions require. But of these, the general opinion is that electric cars will be the main source of demand in the future. "We are on the cusp of mass production now, that is why there is a sense of urgency," said Ravi Krishnaswamy of consultants Frost & Sullivan. Recent investments in battery production have been made between a car manufacturer and a battery specialist, for example GS Yuasa is going to launch a joint venture with Honda and there are reports that Nec and Nissan may increase the investment in their battery joint venture by ¥100 billion by 2012. Hybrid electric cars such as the Toyota Prius use nickel-metal hydride batteries but investments now are for lithium-ion batteries, which are smaller and lighter relative to the amount of energy stored, are expected to power fully electric cars in the future. Panasonic's recent ¥807 billion takeover bid for Japanese rival Sanyo Electric is thought to be because Panasonic wishes to have access to Sanyo's lithium-ion battery business, the world leader in the industry. So many companies are trying to get into the market, however, that there are doubts whether all of them can succeed. "The most successful companies are typically existing lithium battery companies," said Mr Saxman. Sanyo believes that all carmakers will want at least two battery suppliers in order to reduce risk. It says that its proved technology, customer relationships and global manufacturing base will give it an advantage over ventures part-owned by rival carmakers. Sanyo already plans to invest ¥80bn by 2015 and with Panasonic in the driving seat this may be increased. Krishnaswamy of Frost & Sullivan says Japanese and South Korean producers are well ahead, but US companies are trying to catch up. Last month, A123 Systems, a US battery maker, applied for $ 1.84bn in US government loans to build a lithium-ion plant. In spite of Toshiba pulling out of the lithium-ion battery market in 2004, it has now decided to start mass production in 2010 which analysts expect to cost several hundred million dollars. Since leaving the battery sector, Toshiba has not stop its battery research and says the decision reflects its confidence in a new technology called SCiB, which it claims is not only safer and longer lasting than other lithium-ion batteries, but can also reach up to 90 percent of its full charge in as little as five minutes. In December 2007, Toshiba announced the general commercial launch of a 4.2 Ah cell version of its fast-charging SCiB---Super Charge ion Battery---lithium-ion battery and is developing a 3.0 Ah high-power version of the cell specifically for hybrid electric vehicle (HEV) applications. -END- | |
| February 04, 2009 Jinchuan raises cobalt price by 9% Publisher: Metal Pages | |
| BEIJING (Metal-Pages) 03-Feb-09. The major Chinese cobalt producer Jinchuan Group raised its website offer prices for cobalt metals yesterday afternoon by another Rmb 30,000/tonne, after two price increases during the first half of January. The Gansu-based company is quoting Rmb 350,000/tonne ($23.26/lb) for 99.8% cobalt metal, up from Rmb 320,000/tonne which has been in place since 12 January. Its website offer price for the plate shaped cobalt metal has also moved up to Rmb 348,500/tonne ($23.16/lb), also representing an increase of Rmb 30,000/tonne from the previous Rmb 318,500/tonne basis. -END- | |
| January 22, 2009 Idaho Cobalt Project Moves Ahead with New Decision Publisher: The Challis Messenger Author: Todd Adams | |
| Idaho Cobalt Project moves ahead with new decision BY TODD ADAMS The long process toward construction of the Idaho Cobalt Project took another step forward this week with the publication of a revised Record of Decision (ROD) to allow cobalt mining in the Panther Creek drainage. "This is good news," Guy Jeske, Idaho Cobalt Project General Manager, told The Challis Messenger. "This is a significant development and a decision that I hope will stand," Salmon-Challis National Forest Supervisor Bill Wood told The Messenger. Formation Capital Corporation (FCC) officials figure they can start construction on the mine in May, even if there are appeals to the new ROD, Jeske said. The company has not yet seen the new document, but is confident it can fine-tune its plan of operations to address any new concerns the Forest Service might raise, Jeske added. This is the second ROD issued after the first was overturned by Regional Forester Harv Forsgren in October and sent back to the Salmon-Challis National Forest for revision. FCC believes it has enough time to make any changes to its plan of operations and still begin construction sometime in May, after the snow melts, Jeske said. The company's goal is to start producing by 2010. Wood agreed it's possible that Formation Capital could break ground this season provided the regional forester upholds this latest decision and the project is not challenged in court. Wood has selected Alternative IV from the Environmental Impact Statement, which would result in about 132 acres of surface disturbance for an underground mining operation for cobalt, copper and gold in the Panther Creek drainage, adjacent to the former Blackbird Mine. FCC must submit a new plan of operations consistent with provisions in the revised ROD. If the Forest Service approves the plan, the company then must post a $44 million bond (plus or minus 20 percent) to ensure long-term management of wastewater and runoff from the mine. Formation Capital must also secure a National Pollution Elimination Discharge Permit from the Environmental Protection Agency and obtain easements for power and road access through the old Blackbird Mine to the Idaho Cobalt Project area. Jeske said all three items are in the works and the company is confident it can clear all the remaining permitting and regulatory hurdles so construction can begin. Background After the first ROD was released in June of 2008, Forsgren wanted more information on how the mine's plan of operations would comply with laws and affect the environment. Specifically, he wanted to know how the plan of operations would manage sedimentation to streams during the construction phase and how groundwater would be managed and treated, Wood said. The regional forester also wanted the Salmon-Challis forest to document consultations with tribal officials on the Idaho Cobalt Project and to do a watershed analysis of the Panther Creek drainage. Forsgren last year approved the final Environ-mental Impact Statement as meeting all requirements of the National Environmental Policy Act (NEPA). He said it had thoroughly discussed potential impacts to aquatic resources and riparian areas, but that information had not been compiled into a watershed analysis, a separate document required under the forest plan. The new ROD also provides a more succinct description of potential mining impacts on the characteristics of Inventoried Roadless Areas and their management under the October 2008 Idaho Roadless Area Management Rule. "We feel we've complied with everything the regional forester asked us to address," Wood told The Messenger. "We're hopeful and confident this time around that the regional forester will uphold the decision." Wood's first Record of Decision received a very critical look, said Ray Henderson, the Salmon-Challis forest's former minerals project director, who is now working as a consultant on the Idaho Cobalt Project. The second ROD is essentially the same decision, he said, but is better supported than the first document. Wood's latest ROD deals only with the Ram deposit, the larger of the two cobalt deposits that Formation Capital is planning to mine. The Ram deposit has enough known reserves for 10 years of production, based on the mill's capacity of 280,000 tons of ore per year, Jeske said. By contrast, the Sunshine deposit has one year of proven reserves and would be developed only after the underground mine for the Ram deposit, said Jeske. The Forest Service is deferring any decision on the Sunshine until FCC provides the agency with a supplemental plan of operations, according to the legal notice. Formation Capital hopes to employ 157 miners from the Salmon and Challis areas during production with a payroll of $9.5 million per year, company officials have said. Another 37 people would be employed in the Kellogg hydometalurgical plant for refining the ore. Mine and mill construction is estimated to cost $70 million, employ 50 workers and take about a year. The project is expected to generate $8 million per year in taxes to local governments. The Challis Messenger • P.O. Box 405 • Challis, Idaho 83226 Telephone 208.879.4445 • Fax 208.879.5276 • E-mail: info@challismessenger.com | |
| January 02, 2009 Li-ion Batteries Mass Production by Alliance of 14 U.S. Battery Makers and National Lab Publisher: Metal-Pages, London | |
| LONDON (Metal-Pages) 02-Jan-09. A U.S. government laboratory has formed an alliance with 14 U.S. companies with expertise in batteries and advanced materials in order develop manufacturing facilities for the mass production of lithium batteries for vehicles, as reported by Reuters. The alliance, which includes battery industry giants such as 3M Co and Johnson Controls-Saft, intends to secure $ 1 billion to $ 2 billion in U.S. government funding over the next five years to build a manufacturing facility with an "open foundry" for the participants to develop the perfect lithium-ion battery for cars. "It's a huge deal for the nation, and for the lab," said Mark Peters, who is in charge of transportation and battery research at Argonne National Laboratory near Chicago, which will advise the group. China, Japan and South Korea are the current leaders in lithium battery research, he said in a telephone interview. "A small, fragmented (U.S.) battery industry will not long survive in the face of determined Asian competition," Ralph Brodd, a consultant to battery manufacturers, said in a statement released by Argonne. The Argonne National Laboratory is one of the U.S. Department of Energy's largest research centers. It is also the nation's first national laboratory, chartered in 1946 and is recognised for its excellence in connecting basic research to innovative technology. "(Other) countries understand that he who makes the batteries will one day make the cars," he added. The best-selling hybrid vehicles such as Toyota Motor Corp's Prius use a nickel metal hydride battery. However, lithium batteries are widely considered to be the next technological leap forward for electric-powered vehicles, as they can be recharged in a wall socket like a computer battery. The National Alliance for Advanced Transportation Battery Cell Manufacture was modeled after SEMATECH, the successful public-private venture created in the late 1980s to restore U.S. prominence in computer semiconductor technology. In addition to Johnson Controls-Saft Advanced Power Solutions, a joint venture of Johnson Controls Inc and France's Saft Groupe SA, and the 3M Co the founding members of the battery alliance are ActaCell, All Cell Technologies, Altair Nanotechnologies Inc, Eagle Picher Industries Inc, EnerSys, Envia Systems, FMC Corp, MicroSun Technologies, Mobius Power, SiLyte, Superior Graphite, and Townsend Advanced Energy. In addition to an advisory role for Argonne, U.S. truck and automobile manufacturers will be asked to join the alliance's advisory board, said James Greenberger, an attorney who was instrumental in assembling the group. -END- | |
| November 20, 2008 Formation Capital Has Kept The Lawyers At Bay And Now Awaits A New Environmental Decision On Development Of The Idaho Cobalt Project Publisher: Minesite.com Author: Charles Wyatt | |
| Formation Capital Has Kept The Lawyers At Bay And Now Awaits A New Environmental Decision On Development Of The Idaho Cobalt Project By Charles Wyatt Patience and persistence are the two prime qualities to be sought in the chief executive of a junior mining company in which it is worth investing. Such a chief executive takes problems on the chin and finds ways of solving them. Not for him, or her, the whinge and hide tactics adopted by some peers. Such a chief executive fronts up and discusses the pros and cons of events applicable to their companies rather than burying his or her head in the sand and hoping the financial scene will improve while he or she remains in this inelegant position. Names such as Michael Carvill of Kenmare Resources, Colin Loosemore of Archipelago, and Josef El-Raghy of Centamin Egypt come to mind among those whom we have written about recently as meeting these qualities. They are now joined by Mari-Ann Green, chief executive of Formation Capital. She thought she was pretty well home and dry in assembling the mass of permits needed to bring her company's cobalt mine in Idaho into production. Then she woke up one morning in October to find that the positive Record of Decision granted by the Regional Forester in June had been remanded -- overturned is a better word -- and that it will now be necessary for the Salmon Challis National Forest authority in Idaho to issue a new one which -- hopefully - would be upheld by the Regional Forester. Don't ask for an explanation of all these titles, but the bodies concerned are all involved with environmental issues, or so they say. This turn of events was completely unexpected. It came at a time when Formation Capital had been looking for mine financing in the hopes of beginning mine construction during the third quarter of 2008. But there was no alternative but to put the financing on hold until a new Record of Decision was issued. This is unlikely to happen before Christmas. A tough entrepreneur can always find something positive in a difficult situation. Mari-Ann Green says that now is not the best time to be looking for funding anyway and that the delay means that her team of mining engineers, metallurgists and other professionals can now review the project's detailed engineering and the planned procurement of mining equipment to assess where changes can be made to save time and money. Also in times of recession the prices of all commodities are hit so there could be scope for significant savings on construction materials such as steel. And she also points out that the company no longer faces the problem of carrying out construction in the winter months when costs rise and efficiency falls. For her part she has initiated meetings with the Boulder White Clouds Council and Earthworks, the two environmental groups which appealed against the Record of Decision. She resisted going the route of lawyers as both these groups have very deep pockets, funded as they are by celebrities living in Sun Valley who join every available environmental group and think that earning a living pretending to be someone else means they have a brain. Lawyers seldom reach a compromise as they are paid to win, so knowing this, Mari-Ann Green sat down with the environmentalists and hammered out a series of deals. First, a revised methyl mercury plan was agreed, even though there were no specific concerns about methyl mercury at the Idaho cobalt project. Anyway, a study which involves the analysis of fish tissue will take place to see if there is any impact on water quality. Second, a copper loading demonstration plan was designed with input from all parties to protect the watershed from any additional copper loading. Again the Final Environmental Impact Study had indicated that there was absolutely no chance of this happening, but Mari-Ann assuaged the worries of the environmentalists by agreeing that surface and ground water would be monitored to determine if additional copper loading occurs and, if it does, to locate its source. Arsenic was the other worry, so it was agreed that an effluent concentration level of 10 parts per billion (ppb) should be set for any discharge, despite the fact that the current State standard for arsenic is 50 ppb. This was good sensible negotiating, and the result was that the two environmentalist groups agreed not to challenge the new Record of Decision. No use knocking them. They think that the environment is more important than the people who live in it, and it is a view to which many rich townies affiliate themselves. Presumably they overlook the statement made by the Forest Service that the project is "of great importance to the community". As Mari-Ann points out, she has lived in Idaho most of her life, she thinks it is the loveliest place on earth, and she would do nothing to damage it. Cobalt, however, is a strategic metal and the US has no other sources of primary production. Her company is currently in a sound financial position, with C$5.6 million in cash and an additional C$4.4 million in precious metal inventory as at the end of August, metal inventory built up from the Big Creek Hydrometallurgical Complex, which includes the Sunshine Precious Metals Refinery, and is already generating cash flow for Formation. The Idaho cobalt project received a positive 43-101 compliant bankable feasibility study in July 2007 and is expected to produce around 1,500 tonnes annually of super-alloy grade high purity cobalt metal over a minimum ten year mine life. With the price of cobalt still above US$30 per pound, and with an outlook of increased demand, the economics of the project remain very positive. Mari-Ann is certainly not going to be deterred from her purpose by celebrity environmentalists or the current glitch in world finances. -END- | |
| November 12, 2008 Global Cobalt Market to Reach 69 Thousand Metric Tons by 2012 Publisher: Global Industry Analysts, Inc. | |
| Global Cobalt Market to Reach 69 Thousand Metric Tons by 2012, According to New Report by Global Industry Analysts, Inc. World demand for cobalt is rising due to increase in usage of this metal in mobile phone batteries, false limbs, automobile rechargeable batteries, catalyst in industrial processes and fighter jets. The global cobalt market is projected to reach a volume of 69 thousand metric tons by the year 2012, reflecting a compounded annual growth rate of 5% over 2008-2012 period. San Jose, CA (PRWEB) November 11, 2008 -- The global market structure for cobalt has changed drastically over the past few years. New end-use applications and large number of cobalt producers have emerged in the market, along with the continuous rise in the price of the commodity. Cobalt is now being manufactured separately, unlike the previous years, where the product was the result of various by-product operations. Further, demand for the product is rising rapidly which is in turn leading to a steep rise in the prices of the commodity across the globe. Worldwide, cobalt market is witnessing a shift towards nickel-based production from copper-based production. On the consumption front, majority of consumers are increasingly opting inferior quality cobalt, rather than primary cobalt, owing to high variation in prices. On the other hand, not withstanding the price factor, the demand for cobalt in specialized applications is on a rise over low value applications, where the option of other substitute materials is not viable. Europe represents the largest market for cobalt with an estimated 19.4 thousand metric tons for 2008. Asia-Pacific represents the fastest growing market, reflecting a CAGR of 9% for the period 2008-2012. The market is projected to reach 22.5 thousand metric tons by 2012, as stated by Global Industry Analysts, Inc. Batteries depict the fastest growing end-use market for cobalt and is projected to expand at a CAGR of over 7.7% in during the analysis period, 2000-2010. Super Alloys are projected to be the largest end-use market for cobalt and projected to reach 12.6 thousand metric tons by the year 2012. Key players dominating the global cobalt market include Caledonia Mining Corporation, Chambishi Metals Plc, Compagnie de Tifnout Tighanimine, Eramet SA, Eurotungstene Poudres SA, Freeport-McMoRan Copper & Gold Inc., H. C. Starck GmbH & Co., KG, Minara Resources Limited, MMC Norilsk Nickel Group, Nanjing Hanrui Cobalt Co. Ltd., OM Group Inc., Osram Sylvania, QNI Pty Ltd., Sherritt International Corporation, Sumitomo Metal Mining Co., Ltd., Umicore, Vale Inco, Xstrata Plc, and Zambia Consolidated Copper Mines. The report titled "Cobalt: A Global Strategic Business Report" published by Global Industry Analysts, Inc., provides a review of end-use applications, production and pricing scenario, and recent industry activity. The study also analyzes market data and analytics in volume sales for major geographic regions including the US, Canada, Japan, Europe, Asia-Pacific, Latin America, and Rest of World by the following end-use segments - Adhesives and Dryers, Batteries, Catalysts, Cemented Carbides, Hard-Facing & Other Alloys, Magnets, Super Alloys, Specialty Chemicals, Pigments, and Others. For more details about this research report, please visit http://www.strategyr.com/Cobalt_Market_Report.asp About Global Industry Analysts, Inc. Global Industry Analysts, Inc., (GIA) is a reputed publisher of off-the-shelf market research. Founded in 1987, the company is globally recognized as one of the world's largest market research publishers. The company employs over 700 people worldwide and publishes more than 880 full-scale research reports each year. Additionally, the company also offers a range of over 60,000 smaller research products including company reports, market trend reports, and industry reports encompassing all major industries worldwide. Global Industry Analysts, Inc. Telephone 408-528-9966 Fax 408-528-9977 Email press @ StrategyR.com Web Site http://www.StrategyR.com/ -END- Note from Formation Capital Corporation: Despite falling commodity prices and world wide financial crisis, outlook for cobalt remains strong as demand is expected to rise. Other independant sources forcast demand to reach upwards of 100,000 mt by 2012. | |
| November 05, 2008 Mining's future looks good in an Obama Administration, but so-so in Congress Publisher: Mineweb Author: Dorothy Kosich | |
| RENO, NV - U.S. mining would have fared well with the election of either Senator Barack Obama or Senator John McCain as president, thanks to considerable groundwork by mining companies and their associations. President-elect Obama hails from a coal state, Illinois, and has long been a proponent of federal funding of clean coal technology. However, the outlook for mining may not be so rosy in the U.S. House and Senate. The Obama campaign targeted so-called swing states, a number of them western mining states, including Nevada and Colorado, which voted in a Democrat for president for the first time in years. However, Utah and Wyoming voted with McCain and the GOP. During a campaign stop September in Reno, Obama said, "We'll invest in technology that will allow us to use more coal, America's most abundant energy source, with the goal of creating five 'first-of-a-kind coal-fired demonstration plans with carbon capture and sequestration." On September 23rd, the Obama-Biden campaign announced a Clean Coal Jobs Task force with the mission of working "to promote the Obama-Biden agenda to invest in advanced coal-based technologies, create more jobs in the coal sector and enhance mine safety." The Obama presidency may also portend good fortune for hardrock miners. The Associated Press reported late last year that Obama opposes the Hardrock Mining and Reclamation Act of 2007 on the ground that it places a significant burden on the mining industry and also would have an adverse impact on jobs. Now stalled in the Senate, the Hardrock Mining and Reclamation Act would impose a gross royalty on mining on federal lands. AP reported that Obama opposes the section of the bill that would impose royalties of 4% of gross revenue on existing hardrock mine, and an 8% gross-revenue royalty on new mines. Right to work states, including Nevada miners, will find Obama to be a strong supporter of unions. In fact, the Obama for President Campaign website says he will aim "to strengthen the ability of workers to organize unions." National Mining Association Senior Vice President Carol Ralston told Mineweb Tuesday that miners recognized mining states were going to be battleground states. Mining companies and their associations "worked very hard with both campaigns" to improve understanding of three key policy areas: energy policy (such as carbon capture and storage R&D); minerals policy (including mining law reform and abandoned mined lands; and mine safety. Most importantly miners and their associations consistently reached out to both political parties, Ralston advised. Another area of concern to miners may be the Obama Administration's appointments to key cabinet positions such as the secretaries of interior and energy. The president-elect is likely to choose several of his top aides, including some Cabinet secretaries, from three key sources: Democratic governors midway through their second and final terms in office; former top officials from the Clinton Administration; and politicians from Obama's home base of Chicago. Possible U.S. attorney general candidate, Gov. Janet Napolitano of Arizona, is expected to play a prominent role regarding western issues. New Mexico Gov. Bill Richardson, believed to be on a short list for U.S. Secretary of State, is a former U.S. energy secretary and hails from another western mining state. Gov. Ed Rendell of Pennsylvania or Montana Gov. Brian Switzer may be considered for the top energy job. No word yet as to who might be named to head the Department of Interior or the Environmental Protection Agency. A potential Ming Safety and Health Administration (MSHA) appointee has also not been revealed at this point. An Obama administration has also been publicly supportive of a massive infrastructure program, which would benefit base metal and industrial minerals companies. Another potential issue looming on U.S. gold mining's horizon is a U.S. offer from the outgoing Bush Administration to host a global summit in December modeled on the 1944 Bretton Woods system. Bretton Woods is credited with tying the trading and currency systems to the gold standard to achieve global stability. Although the U.S. abandoned the gold standard in 1971, the Bretton Woods system is still alive. AND THEN THERE'S CONGRESS... As of Mineweb's deadline early Wednesday morning, Democratic senators held 54 seats compared to the GOP's 50 seats with several races yet to be decided. Mining's stalwart and powerful advocate, Sen. Pete Domenici, R-New Mexico, is stepping down because of illness. New Mexico Congressman Tom Udall, a well-known environmentalist, was declared the winner of Domenici's senate seat. The son of former U.S. Secretary of interior Morris Udall, Democrat Mark Udall will hold the U.S. Senate seat being vacated by Republican Wayne Allard. Idaho's staunch hardrock mining advocate, the scandal -plagued Larry Craig, did not seek re-election. Idaho Lt. Gov. Jim Risch, a Republican, has been elected to Craig's former seat. Democratic West Virginia Senator Jay Rockefeller, a strong mine safety advocate, easily won re-election, as did fellow Democrat Max Baucus of Montana. Republican Senator Mike Enzi of Wyoming was re-elected, while fellow Senator John Barrasso, also of Wyoming, was elected to fill the remaining four years of the term of the deceased Sen. Craig Thomas. Most importantly, Senate Majority Leader Harry Reid, D-Nevada, the son of a hardrock gold miner and domestic hardrock mining's most powerful advocated, has gained even more control of the Senate. However, he fell short of a filibuster-proof 60-seat Senate majority. Nevertheless some Republicans could occasionally join Democrats to break Senate logjams on bills and judicial appointments. Meanwhile House Democrats solidified their control of the Northeast and made good gains in the South, ousting four Republic incumbents and capturing five open GOP seats. Nevada Congressman Dean Heller, a Republican, was maintaining his lead over rancher Jill Derby as of Mineweb's deadline. Longtime small-miner champion Don Young, a Republican, was holding onto a slim lead for his congressional seat representing Alaska. Senator Ted Stevens of Alaska, who was recently convicted of corruption last week, is locked in a tight race with Anchorage Mayor Mark Begich. The 84-year old Stevens is the longest-serving Republican in the U.S. Senate. New senators will also have to be appointed to represent Illinois and Delaware now that Obama and Vice President-Elect Joe Biden are leaving the U.S. Senate. -END- | |
| October 29, 2008 Resources and resource stocks will boom again -- perhaps sooner rather than later Publisher: Lawrence Williams | |
| LONDON, October 29, 2008. Despite all the gloom and doom in the industrial and precious metals sectors at the moment, there is little doubt that resource stocks will surge back into favour again, but the big question is when, and how much overall sentiment has been damaged by recent events, and how long such damage will continue. History tells us that market memories are relatively short and serious effects tend to be measured at worst in a few short years rather than decades! The resource sector has seen this before. The most recent major example has been the gold sector post the Bre-X scam. It did take a few years to recover, but ultimately bounced back stronger than ever. However the latest crash is somewhat different. It is not only resource stocks which crashed, but stocks in general, although admittedly the resources decline has been more severe than most. It is truly remarkable how quickly what had been a booming sector has turned to bust. But there is an argument that the collapse has been hugely overdone and that the upturn, when it comes, could be equally rapid, although perhaps not as steep. This is, perhaps, an optimistic take on the situation. Special situations may exist which could see this more than likely happening in specific sectors of the resource industry. Precious metals - notably gold and silver - do not necessarily follow predictable patterns in the market and can buck overall trends quite dramatically as the normal laws of supply and demand do not necessarily apply. There are always other factors in play here. For natural resources in general, and resource stocks in particular, there is little doubt that there has been a degree of overselling that bears little relevance to the true market situation. The recent price crash means that there will be a serious impact on new production in the immediate future as projects are slowed down, postponed or irredeemably cancelled, with a corresponding effect on future supply. Supply increase projections will in many cases be put back by three to four years or more. What this means is that as soon as the world pulls out of the current financial predicament, and while this may not be a quick process it will indeed happen, commodities are going to be in short supply again - and in some cases seriously short supply. Those which were already heading that way anyway before the meltdown may be those which will benefit most in price terms - perhaps platinum, tin and zinc may be good bets in this respect. Forward production plans for platinum and zinc mining in particular are likely to have been decimated by the huge price falls seen which have made many operations sub-economic and put a rapid halt to many new projects under development or at the planning stages. Nickel too is an interesting metal in this respect. Comments at Aspermont UK's 20:20 nickel meeting in London yesterday suggested that an important proportion of the world's nickel production is sub-economic at current price levels - notably in mining and processing of some nickel laterite ores - which has already brought some major projects to a grinding halt, and is likely to lead to closures elsewhere. Chinese pig nickel production has, in effect, shut down and estimates of nickel production taken off the market already is around 150,000 tonnes (around half from the Chinese pig nickel operations which need considerably higher prices to be profitable). If the price stays at the current level of around $5/lb for any extended period more closures and slowdowns are likely to be seen. BHP Billiton, for example, reckons its big Ravensthorpe nickel project in Australia needs $5-$6/lb nickel to break even at full production - and it's still two years away from achieving that status. Even a company like BHP, which is in it for the long term, is unlikely to run lossmaking operations indefinitely. But what is being seen here applies to other metals and minerals too. Low prices are prevalent virtually across the board, and coupled with banks loath to loan anyone serious sums of money with even the smallest risk of disruption (which puts almost any project in areas of less stable political environments at risk - think DRC in this respect), future industrial metals supplies are in for a very tight squeeze indeed - and this has to have a huge effect on price prospects. To an extent the speed of price recovery depends on countries like China and India maintaining demand growth while the rest of the world stagnates. If China does indeed continue to grow at 9 percent a year as many suggest (others downgrade this to 7-8 percent - but growth nevertheless), then the metals price recovery could be rapid and prolonged. If we have seen the market bottom - and that is by no means certain until some more financial disasters are played out - then commodities and commodity stocks could well be a good place to be for above average gains as markets pick up. But as we have stated before you need to do your homework. Major miners should be good bets for growth from current levels, but it is in junior and mid-sized companies that the biggest returns could be made. But here one needs to make sure one chooses companies which are financially strong enough to survive whatever is left of the downturn or stagnant period. To mitigate risk, one would also suggest choosing those operating in low risk areas of the world - and there don't seem to be too many of these around these days! -END- | |
| October 29, 2008 Boeing sees China buying 3,710 new planes by 2028 Publisher: MarketWatch Author: Christopher Hinton | |
| NEW YORK (MarketWatch) -- Boeing Co. said early Wednesday it anticipates the China market for new aircraft will grow to $390 billion over the next 20 years. Altogether, the Chicago manufacturer expects the Asian country to purchase 3,710 planes before 2028. By then, China's passenger and cargo growth is likely to triple the country's total fleet number to 4,650 airplanes, about as many planes as there are in Europe today. "China will continue to be the fastest-growing aviation center in the world, requiring 41% of the entire Asia-Pacific region airplane demand," said Randy Tinseth, Boeing commercial airplanes vice president of marketing, in a statement. "This makes China the largest market outside of the U.S. for new commercial airplanes." Boeing said it expects single-aisle aircraft will account for 70% of new Chinese purchases. The company's next-generation 737 will make up the largest category with 2,600 scheduled deliveries. Demand for wide-body planes, such as the 777 and the long-anticipated 787 Dreamliner, will count for about 780 plane deliveries. Boeing's backlog is at a record $276 billion, and is expected to keep the manufacturer busy for at least next six years. Despite that, investors have fretted over the impact of the credit crisis on new aircraft financing and sharp declines in global air-traffic numbers, particularly in Asia and the Middle East. Shares of Boeing rose 3.7% at last check to $50.63. It was up 15.5% in prior-day trading after the company announced a tentative labor contract with its machinists union. The company's machinists have been on strike since Sept. -END- | |
| October 29, 2008 Bulls see recovery for cobalt Publisher: Metal-Pages | |
| LONDON (Metal-Pages) 29-Oct-08. Despite the recent slide in cobalt price the bulls claim the market has reached a floor and is now staging a recovery. With nickel, the base metal of which cobalt is associated as a by-product and with which it can be alloyed, staging a 50 percent recovery since Friday, the bulls in the cobalt market believe the metal is about to steal the limelight once again. Metal-Pages reported yesterday that the market is seeing a downward trend, and there is no way it can go up amid the global economic crisis. However, some people in the market disagree, reporting on Wednesday that there are significant enquiries for 2009 delivery in the market. A UK trader pointed out that with the imminent likely resolution of the Boeing strike, it looks like Boeing will ramp up production. He reported that Japanese buyers have come onto the market for Sherritt Gordon briquettes and powder, which he quoted at $ 35/lb and $ 42/lb respectively. He quoted ONG powder at $ 50/lb, Falconbridge material at $ 28-30/lb and Russian material at $ 25-27/lb. The trader said: "People are now taking high purity metal and converting it into powder. The market has now hit the bottom and, like nickel, could now have a very strong rally in a very short space of time." He noted that production at Goro and Tenke Fungurume in the Congo has been delayed significantly, and there is no possibility they will produce any new metal until 2010 at the earliest, and that costs of new mines have doubled. "It looks like the base metals have found a bottom - and this is a good omen for minor metals which usually follow a few months later," he added. -END- | |
| October 09, 2008 Regional Forester Reverses Idaho Cobalt Decision Publisher: The Challis Messenger Author: Todd Adams | |
| Although the regional forester has reversed the Salmon-Challis National Forest's record of decision (ROD) for the Idaho Cobalt Project, company officials are confident the delay will not affect mine construction in 2009. The Forest Service's Ogden Regional Office this week gave the green light to the final Environmental Impact Statement (EIS) but said the ROD failed to adequately address some criteria needed to approve the plan of operations. The ROD is unclear on whether the plan meets all requirements to protect the environment, according to Regional Forester Harv Forsgren. The local forest must provide additional explanation, Forest Supervisor Bill Wood said in an October 6 news release. The Salmon-Challis must now issue another ROD to specifically address items the regional forester wants clarified. Forest officials predict the new document will be issued in November, which then starts another 45-day period during which individuals or groups may again appeal the new ROD. "The Forest recognizes the importance of this project for Formation Capital Corporation and the community," Supervisor Wood said, "and we will do our best to address this as promptly as possible." There will be little, if any, impact in terms of the work schedule for the Idaho Cobalt Project, Bill Scales, President of Formation Capital Corporation (FCC), U. S., said in a news release. Guy Jeske, Idaho Cobalt Project General Manager, told The Challis Messenger that the latest news will only have a minor effect on the company's plans. Formation Capital had planned some limited work this fall and winter, with major construction scheduled to start next spring. Because the Forest Service predicts a fast turnaround it shouldn't delay the bulk of work. The original schedule had the company starting cobalt mining operations during the first quarter of 2010, Jeske said, adding "We'll try to see if we can still reach that goal." Forest Service officials have not yet told Formation Capital what details are missing from the plan of operation, nor asked the company for additional information, Jeske said. It's fortunate the regional forester approved the final EIS, as that document would have taken longer to change, said Jeske. "I would direct people, press and supporters to two things," Scales said. "First, the regional supervisor clearly stated the Environmental Impact Statement complied with the National Environmental Policy Act. Secondly, they noted the importance of the project to the community and pledged to address the clarification issues as promptly as possible." Formation Capital believes a new ROD will better withstand any legal challenges when it is reissued, Scales said. "In the long run this is a helpful move and we take the Forest Service at their word that the delay is short and they can address the questions asked by the Regional Forester to his satisfaction." "We need to make sure we're going through the proper hoops," Salmon-Cobalt District Ranger Kimberly Nelson said. "We feel comfortable we're doing that." She agreed with Formation Capital officials that beefing up the ROD probably would make it less likely to be successfully challenged in court. Three groups and one individual appealed the initial ROD in September. They have standing to appeal again, but so does anyone who submitted comments on the draft EIS, Nelson said. A few hurdles remain before Idaho Cobalt Project construction can begin, said Nelson. The Forest Service must approve Formation Capital's final plan of operations, a reclamation bond [initially set at $44 million] must be in place and the company must obtain a discharge permit from the U.S. Environmental Protection Agency (EPA). That requires a separate EIS and decision from the EPA. -END- | |
| August 28, 2008 US cobalt prices leap on talk of producer shortages Publisher: Platts Author: Anthony Poole | |
| New York (Platts)--28 Aug 2008 Cobalt prices have leapt nearly $9/lb in the space of a week in the US as the market rebounds sharply from the trough reached mid-last week. This has occurred amid reports of one Asian producer being sold out until late October and BHP selling nearly 100 mt in just over a week after several weeks of virtually no sales. The Platts assessment for 99.8% high-grade cathode rose Thursday to $33.00-34.00/lb delivered US from $25.50-27.50/lb a week earlier. The rebound, which intensified Monday, began late last week as traders, searching to secure supplies of Jinchuan and Xstrata Nickel (Falconbridge) cobalt, reported being unable to obtain metal on the open market. One source told Platts that after looking for 5 mt of either Jinchuan or Falconbridge, he was forced to buy from BHP and paid $26/lb DDP North America late last week. BHP added to its tally of sales in the last week, selling 5 mt for September delivery Thursday at $33.00/lb DDP North America, having sold at $31.50 two days earlier. BHP raised its offer price to $34/lb late Thursday. Consumers in the US said they believed they would have to pay $33/lb for high-grade cobalt, especially Falconbridge, with one purchasing agent adding: "If I dithered, it might be $34. Ask me tomorrow, it might be $35." Traders and producer sources pegged the high-grade in a broad range of $32-34/lb, although some said narrowed it to $32-33/lb, saying that most of the activity had been for Russian K1A and K1Ay. A European trader reported selling 2 mt of K1A on an in-warehouse basis in the US at $30.25/lb for September delivery, adding that another 15 cents freight would apply to most US East Coast and Pennsylvania/Ohio destinations and 50 cents for delivery to the US West Coast. The Platts assessment for Russian 99.3% cobalt rose Thursday to $30.00-31.00/lb delivered US, from $24-25/lb a week earlier. Another European trader reported selling less than 5 mt on an in-warehouse Europe basis at $30.25/lb. And a US trader reported selling a small volume at $31/lb on a delivered basis in the US. Consumers said the speed and veracity of the rebound was largely due to it being pushed down aggressively in the first three weeks of August, after it had moved down incrementally from mid-May in the seasonally slack summer months. "For most of the year, we've been told cobalt is very bullish, demand is at unprecedented levels and then, in the last weeks, those same people have been talking lower and lower numbers, saying the Chinese have plenty of metal," said a second consumer. "Now I've got people telling me cobalt could be back up to $45 in a month's time and yet, a week ago, they thought it was headed to $20 before it bounced." The first consumer concurred: "The aggressive drop wasn't based on any business that I heard. A couple of traders reporting false low sales, who wanted to get the published numbers down enough to buy... but trying to actually buy cobalt at the $23s and $24s was impossible. It couldn't be done. There were no sellers at those numbers," he said. The only way of buying metal was to go to producers, which he described as a "measure of last resort." "Who does it serve? Only the traders. They've done it to inflate their margins and they've screwed the producers and the consumers at the same time," he added. Traders in the US and in Europe said they believed some trading houses had bought material on a formula with the price based on the average published prices for August and had deliberately talked the market down. One European trader said: "Someone's pricing in some purchased material on formula, based on the published average for August and [trying] to keep the average down." The trader added that all this would change after September 1, predicting: "They'll be bullish again." Meanwhile, traders in Europe and in the US said that they had heard that Chinese producer Jinchuan had virtually sold out of cobalt and was now offering high-grade 99.95% cathode at $32/lb DDP Europe, but with shipment not before October 31. Last week, it was offering at $23.50 ex-works in China. Jinchuan could not be reached for comment. A second trader in Europe said that a customer had called looking for material, saying "You're my last hope." The trader reported receiving several consumer inquiries this week but did not have sufficient metal to satisfy the inquiries. "I haven't been able to offer the material that people wanted. I've had to turn quite a few customers down." A third European trader said the market had "pole-vaulted" and consumers "are now waking up to what's gone on and the inquiries are coming in thick and fast from European and US consumers." --Anthony Poole, anthony_poole@platts.com -END- | |
| August 21, 2008 Mining cobalt, and sound practice, in Idaho Publisher: Lewiston Tribune Author: Jim Fisher | |
| What's this: a mining company that gives something other than the back of its hand to environmental organizations, and an environmental organization that helps a mining company get the regulatory approval it needs? The Idaho Cobalt Project promises to be more than the first cobalt mine to open in the United States in decades. It also commits itself, verbally and financially, to avoiding contamination of natural systems while in operation and to leaving the land as close as possible to its former condition when the mine's life is over. In exchange, the Idaho Conservation League expresses confidence that the more than 190 high-paying jobs the project will provide, in both the Salmon and Kellogg areas, won't come at the expense of natural surroundings, as has happened in both areas in the past. Formation Capital Corp., based in Vancouver, Canada, projects an annual payroll of about $9.5 million to the 157 workers at the mine 45 miles west of Salmon and another 39 people at the company's refinery between Kellogg and Wallace. It says more than $8 million will be generated in tax payments, much of it to Lemhi County taxing districts. "The best way to protect Idaho's environment and values is to work with companies instead of having an adversarial relationship," says Rick Johnson, executive director of the Idaho Conservation League. "They said they were serious about being good neighbors here." Johnson said the growing need for cobalt, whose industrial uses include a role in the batteries used in hybrid cars, also figured into the ICL's decision not to oppose the mine. It couldn't have hurt, either, that one of the ICL's most prominent members, former Gov. Cecil Andrus, is a proponent of the project. Andrus also is a member of Formation Capital's board, but even out of government the popular Democrat has no record of lending his name to developments that are environmentally unsound. "The company has said it's important that we are different from a historic mining company," says Andrus, who was first elected governor in 1970 on a campaign against a proposed molybdenum mine in central Idaho's White Cloud Mountains and who has since been viewed with suspicion by the mining industry. In the end, though, it is less the lineup of stars working in this project's favor than Formation Capital's financial commitment to environmental protection that earns thumbs up for this mine. "They were willing to bond for water treatment into perpetuity," says the ICL's John Robison. And the ICL therefore was willing to suppress a reflexive reaction against new mining in a region that has seen more than its share of despoliation. That combination is no happy accident. It is the result of tough - and good - work from both parties. - J.F. -END- | |
| August 05, 2008 Sony to Raise Output of Batteries Publisher: The Wall Street Journal Author: Kenneth Maxwell | |
| TOKYO -- Sony Corp. became the latest Japanese company to step up investment in the booming lithium-ion-battery business, saying it will pay 40 billion yen ($371 million) to increase domestic output of the cells that power many consumer-electronic products. Sony,maker of the PlayStation videogame and the Walkman music players, said the investment is part of a drive to nearly double monthly output of the cells within two years. The rechargeable batteries are used in devices such as mobile phones, laptop computers and digital cameras. Sony said the investment, along with plans to expand lithium-ion battery operations in Singapore and China, should increase its monthly output capacity from the current 41 million cells a month to 74 million a month in fiscal 2010. That should help it keep pace with rival Matsushita Electric Industrial Co., maker of the Panasonic brand of consumer electronics. Matsushita recently unveiled a major drive to beef up its relatively small presence in lithium ion-cell manufacturing, pledging 100 billion yen to build a plant in western Japan that should help it triple production to about 75 million cells a month. In early July, Sanyo Electric Co. confirmed that it plans to invest 125 billion yen to develop its rechargeable-battery business over the next three fiscal years in a move to increase output to about 90 million cells a month from 70 million. With overseas rivals such as Samsung SDI Co. also aiming to cash in on growing global demand for the batteries, Japan's electronics makers want to make sure they don't lose out. According to Tolko-based research and consulting firm Yano Research Institute, global demand for lithium-ion batteries for portable electronic equipment will likely keep showing double digit growth through 2009 followed by a rise of more that 5% annually after that. Late last month, Sony reported net profit for its fiscal quarter ended June 30 sank nearly 50% as sales of high-end mobile phones and cameras slid in developed markets because of weak consumer spending. The company, just emerging from a three-year restructuring, lowered its forecast for net profit in the fiscal year ending March 31 by 17%. -END- | |
| August 05, 2008 Cheaper 'supermagnets' could drive future hybrid cars Publisher: EE Times Author: R. Colin Johnson | |
| PORTLAND, Ore. --- Rare earth permanent magnets could enable smaller, higher-performance motors and power generators. The rub is that they require an expensive, multi-step process to fabricate. Now, Northeastern University researchers claim to have invented a cheap, green, one-step process for creating samarium cobalt permanent magnets. Cutting the cost of producing the powerful magnets could usher in a new breed of hybrid automobiles using smaller, cheaper motors. Space and aircraft applications are also possible. Lead scientist C.N. Chinnasamy of Northeastern University's Center for Microwave Magnetic Materials and Integrated Circuits, said samarium cobalt -- the strongest of the rare earth magnetic materials -- could be manufactured using recyclable chemicals. The manufacturing process would be scalable for high-volume production, and magnets could be built at a fraction of their current cost, Chinnasamy added. "Rare earth magnets are essential to NASA and [the Defense Department] for small, high-performance motors and power generators that can operate in high-temperature environments," said Chinnasamy. "With our process, they can be manufactured much more economically." Chinnassamy worked under the direction of principal investigator Vincent Harris, director of the Center for Microwave Magnetic Materials and Integrated Circuits. Harris said samarian cobalt magnets are well suited for use in aircraft turbines where temperatures are too high for other types of rare-earth magnets. Chinnassamy's single-step process "is not only less expensive, but the chemicals he uses to make them can be recycled over and over again in a green process that is perfect for high-volume manufacturing," Harris claimed. The researchers came up with a nanotechnology approach to manufacturing that replaces the expensive, multi-step metallurgic technique currently used to make rare earth magnets. In the current process, the metallurgic approach melts the cobalt and samarium ores in the correct proportions, but must perform the work in a vacuum to prevent oxidation, increasing the cost of the process. Northeastern's technique instead dissolves cobalt and samarium salts in the correct proportions in a high-temperature solvent. That induces magnet nanoblades -- tiny dipoles measuring just 10x100 nanometers -- to form and drop to the bottom of the solution. An oxidation-preventing coating of polyvinylpyrrolidone is then applied to the nanoblades, resulting in a black magnetic powder that can be formed into powerful magnets in the presence of a strong magnetic field. Other techniques for creating supermagnets composed of nanoblade dipoles have succeeded for high operating temperatures, but the rare earth magnets performed poorly at start-up when the magnets operated at room temperature. However, Northeastern University researchers claim their formulation performs well both at room temperature and at very high operating temperatures, thereby permitting applications such as smaller motors with the same performance as larger engines. -END- | |
| August 01, 2008 MIT splits water with sunlight Publisher: The Chemical Engineer, London, UK Author: Claudia Flavell-White | |
| SPLITTING WATER INTO hydrogen and oxygen at room temperature using solar power, under benign conditions and without the need for expensive catalysts: it's the holy grail of the hydrogen economy. Now, researchers at the MIT claim they found it. Writing in the 31 July issue of Science, MIT chemistry professor Daniel Nocera and postdoctoral fellow Matthew Kanan say they have developed a practical way of generating plentiful supplies of hydrogen gas to power cars, houses etc. Their discovery hinges on a novel cobalt/phosphate catalyst that forms a film on the anode which in turn cleaves the oxygen from water when a current runs through it. A conventional platinum catalyst produces hydrogen at the cathode. The process works at room temperature, uses water at neutral pH, and is easy to set up, raising hopes that it will be straightforward to develop and scale up, and hopefully economic to run at large scale. The researchers are still working to understand the exact mechanism of catalysis at the anode. They know that cobalt ions and phosphate ions were observed to form a thin dark film on the indium tin oxide anode, and that it was this film that appeared to act as the catalyst -- but whether it is Co3+ or Co4+ ions that eventually pull electrons from water to leave behind oxygen atoms and H+ protons is still not entirely certain. However, they have observed that the cobalt phosphate film catalyst appears to regenerate itself, which would make it infinitely more practical for everyday commercial application. While it is of course already possible to split water into hydrogen and oxygen, current technologies consume vast amounts of power and a lot of expensive platinum to catalyse the process, and operate in a harshly alkaline environment. By contrast, Nocera and Kanan's set-up works on standard water and even appears to tolerate some impurities. Interestingly, their breakthrough is the result of Nocera questioning some basic assumptions of catalysis. Frustrated by his lack of progress, Nocera decided to abandon the usual rule to use very stable catalysts that aren't corroded by the reactions they catalyse. By contrast, the cobalt phosphorous film that acts as catalyst breaks down as soon as the current is cut -- but it reassembles as soon as power is restored. "This is the nirvana of what we've been talking about for years," says Nocera. "Solar power has always been a limited, far-off solution. Now we can seriously think about solar power as unlimited and soon." Other experts concur. James Barber, biochemistry professor and photosynthesis expert at Imperial College London, says: "This is a major discovery with enormous implications for the future prosperity of humankind. The importance of [Nocera and Kanan's] discovery cannot be overstated." Nocera says that in ten years' time, efficient, effective photovoltaic cells could provide all the necessary power for household during the day, using excess energy to generate hydrogen for household fuel cells that would provide power over night. Electricity-by-wire from a central source could be a thing of the past, he believes. Before this happens, plenty of work remains to be done. The efficiency and speed of the oxygen-production has to be speeded up. Then the whole arrangement needs to be connected to an energy source -- preferably wind or solar -- on one end and an electricity-producing fuel cell on the other. Finally, scientists hope to find an alternative for platinum both at the cathode and to catalyse the reverse reaction of hydrogen and oxygen into water: with platinum costing over $2000 per troy ounce, a cheaper replacement would go a long way to making both the water reactor and the fuel cell affordable at scale. The solution to at least the second half of this final challenge may be closer at hand than thought: a materials scientists in Australia says that a combination of poly(3,4-ethylenedioxythiophene) (PEDOT) and Gore-tex -- a polymer widely used for water-repellent outdoor and sports clothing -- could replace platinum as the fuel cell catalyst of choice. PEDOT is a conducting polymer which, coated onto a Gore-tex membrane, is just as effective as a fuel cell catalyst as platinum. And unlike platinum, the polymer catalyst is not subject to carbon monoxide poisoning, which can occur in platinum-catalysed fuel cells. Doug MacFarlane, professor of chemistry at the Australian Centre for Electromaterials Science, says: "The cost of the platinum component alone of current fuel cells for a small car with a 100kW electric engine is more than the total cost of an 100kW gasoline engine. Also current annual world production of platinum is only sufficient for about 3 million 100kW vehicles, less than one-twentieth of the current annual global production of vehicles." In other words, if we ever want to replace conventional cars with fuel cell models, finding an alternative to the platinum catalyst is a must. -END- | |
| July 28, 2008 Cobalt Typifies The Bull Market Publisher: minesite Author: Rob Davies | |
| Cobalt is one of those metals that everyone is familiar with in a vague sort of way. Most are dimly aware that is probably used in high technology applications, but would struggle to name a primary cobalt mine or producer. And as for so many speciality metals, the cobalt market is actually quite a small market. Metals consultancy CRU estimates that the total market in 2007 was for only 60,000 tonnes. But that demand is surprisingly widespread. One third of consumption goes into what is deemed environmental applications, such as solar panels and fuel cells. A bit more, about 36 per cent, is used for industrial applications such as drill bits and ball bearings. Surprisingly turbine blades and jet engines only accounts for 22 per cent of cobalt use. The remaining nine per cent is consumed in the electronics industry in things such as hard drives, memory chips and cell phones. That is a pretty widespread range of uses in what can loosely be called technological applications. Beyond that, cobalt is being tested for use in products such as lithium ion batteries and hydrogen storage systems. If the world is going to continue increasing its use of technology then it is hard not to believe that cobalt has a big future ahead of it. That's why consumption of this metal is expected to rise to 75,000 tonnes by 2010 and to 100,000 tonnes by 2012. In mining terms those dates are not very far away. So who will supply this metal? Formation Capital is building an integrated mine and processing facility in Idaho with a total contained cobalt resource of 13 million pounds or nearly 6,000 tonnes.[*] Formation clearly hopes to be part of the equation. Right now supply comes from a variety of sources, mostly as by-product of nickel and copper mining, though there is one primary mine in Morocco and one in the US. Much will come out of the Congolese copperbelt, mostly as by-product. But the Cobalt Development Institute, a not-for-profit industry body designed to promote cobalt, estimates that these various sources generated about 53,000 tonnes of refined cobalt in 2007. That leaves a pretty big gap between what is currently produced and what will be needed in two years time. Not only will be the demand for cobalt be rising sharply, but the demand for the highest level of purity, 99.999%, is forecast to rise even more rapidly. Only about 5,500 tonnes of out of total cobalt metal production of about 23,000 tonnes is suitable for critical superalloy applications. It's estimated that the industry needs to provide another 1,000 tonnes a year of high purity cobalt to match demand. Only two companies today provide this high quality material, Vale and Xstrata, the new owners of the two Canadian nickel miners Inco and LionOre. More supply will be provided as by-products from new mines in places like the Democratic Republic of Congo. But there is substantial risk to these, especially in terms of timing. Although US$40 a pound might look expensive now, if these projections are right, then US$40 could look like a bargain in a few years time. There may be some speculation in some precious and base metals, but cobalt is so specialised that it would be difficult for traders to build up a large position in this metal. This fundamental situation suggests that, despite what some pundits are saying, the end of the commodity boom for this metal is not in sight just yet. -END- * Formation Capital notes that the reported resources in its NI 43-101 compliant Technical Report for the Idaho Cobalt Project utilizing a 0.2% cut-off amount to 37.3 million pounds of cobalt in a measured and indicated categorty and 13.1 million pounds of cobalt in the Inferred category. | |
| July 24, 2008 4 Commodities Ready to Shock Investors - #4 Demand Surging, Supply Uncertain for Cobalt Publisher: Energytechstocks.com Author: Energytechstocks.com | |
| As if the oil price shock that has thrown the world into turmoil isn't bad enough, there's reason to believe at least four more commodity price shocks may be headed straight for investors' portfolios. Last up: cobalt, a commodity that attracts surprisingly little media attention, given how uncertain its supply is in the face of surging demand. Like water, cobalt isn't traded on an exchange. But the effects of its surging prices can be felt everywhere. Cobalt is found in cell phones, laptops and car batteries. It's also an essential component of artificial joints in people. While the price of cobalt is up nearly 60% over the last 12 months, and now reportedly stands at a 30-year high, an even greater price shock could occur at any moment. That's because, as recently noted on the web site of the respected magazine Foreign Policy, half of all cobalt reserves are in the "volatile" Democratic Republic of Congo. The unsettled state of the country's mining contracts with foreign firms including BHP Billiton Ltd. and Freeport-McMorRan Copper & Gold Inc. presumably could lead to work slowdowns or shutdowns at any time. The government wants them renegotiated, having found the contracts to be unfair to the state. Last week Bloomberg News reported that former U.S. President Jimmy Carter's human rights organization is opposed to any renegotiation unless the rights of miners are taken into greater consideration, further muddying the outlook. Meanwhile, demand for cobalt continues to surge, with "tech-hungry China's cobalt consumption expected to climb at least 7%" per year through 2009, according to Foreign Policy. The takeaway for investors here is that some companies might possibly do well with their cobalt recycling technology. Mitsui Mining & Smelting Co. Ltd. and Sumitomo Metal Mining Co. Ltd., both of which trade in Tokyo, reportedly have developed technology that can recover nearly all of the cobalt in nickel metal-hydride (NiMH) batteries. #1: Coal's Fundamentals 'May Be Stronger Than Oil's' #2: Water Costs To Surge On Regulations, Infrastructure #3: A War In Africa May Cause Phosphate Energytechstocks.com -End- | |
| July 24, 2008 The hi-tech metal that could save the airline industry Publisher: Moneyweek.com Author: Chris Mayer | |
| In investing, the prospect of crisis has always been a sort of summons for me. It's like when I was a little boy and the ice cream truck's jingle sent me running for loose change on a hot summer day. These days, I'm just trying to get at goodies of a different sort -- profitable investment ideas, instead of ice cream bars. And today's aviation industry has a big crisis on its hands. As a percentage of airline costs, fuel is now about 35% of the total -- up from only 13% at the start of the decade. It is the airline industry's No. 1 expense. The cost of fuel puts enormous pressure on the industry. At the same time, regulators are pushing for cleaner planes with fewer emissions. "The price of oil has challenged and changed all realities for the aviation industry," says Tim Clark president of Emirates, a Dubai-based carrier. "This is the greatest crisis in aviation's history -- bigger than the Gulf wars, Sept. 11, SARS and past oil shocks." If oil prices stay where they are and nothing else changes, the airline industry will lose about $6 billion this year, compared with a profit of $5.6 billion last year. Many airlines will be taking that familiar stroll into the bankruptcy courts. Globally, 24 airlines have already filed in just last the seven months. The industry is trying -- and will try -- lots of different tactics to fend off elimination. One of these is to push for more fuel-efficient aircraft. And that is the opportunity for investors to cash in on this crisis. It starts with the jet engine. Today's Wall Street Journal published "Jet Engine Makers Launch New War" -- all about the drive for new fuel-efficient engines. The piece notes that airlines worldwide want to replace their existing fleets with next-generation planes, not the current oil-guzzling models. The goal of the jet engine makers -- or rather, the mandate put to them by their customers -- is to deliver at least double-digit gains in fuel-efficiency. As the WSJ reports: "Developing fuel-efficient engines requires the use of exotic alloys and ceramic coatings that can cope with internal engine temperatures that would be above the melting points of untreated metal components." Enter cobalt. It's a tough metal with a high melting point of 2,700 degrees Fahrenheit. This higher melting point allows it to maintain its strength at higher temperatures than other metals can. Cobalt alloys have higher melting points than either nickel or iron alloys. As a result, one of the main uses of cobalt is in superalloys such as those that jet engine makers need. In fact, the making of superalloys consumed about a quarter of global cobalt production, of which about 75% wound up in aircraft. Cobalt would seem to have a nice backdrop of long-term demand. But it doesn't stop there. Defense spending is also on the rise globally. A Financial Times report on aerospace notes that India, China, Brazil and certain Middle Eastern countries are all upping their defense spending. India alone may spend $40 billion in 2009. Cobalt is an important part of all that, too. In fact, the U.S. and the Soviet Union used to stockpile cobalt for defense purposes. Those stockpiles are long gone, but the role cobalt plays in defense still exists. As exciting as the aerospace angle is, a potentially bigger market could be batteries for hybrid cars. As I pointed out in the last issue, there are 5-10 pounds of cobalt in a typical hybrid car battery. Hybrid car sales will probably hit 500,000 cars this year. And that is growing rapidly. Kitco recently noted that cobalt holds an electric charge better than almost any other metal. That makes it hard to replace, even at $50 per pound. "And the current electric batteries work so well," Kitco notes, "[that] there is little incentive to change their structure (and other metal prices have skyrocketed, as well as cobalt -- nothing is cheap anymore)." With the failure of banks and the troubles of big financials such as Fannie Mae, cobalt seems a nice place to be. A while ago, I recommended a "cobalt play" to the readers of my investment service, Mayer's Special Situations. The name of the stocks is OM Group (NYSE: OMG). I should warn you that the stock is a bit speculative. But let me share a few of the particulars... OMG carries a seemingly absurd valuation. It's not often that you find profitable and growing companies with no net debt trading for big discounts to book value. The specialty chemical industry -- a tribe to which OMG belongs -- is undergoing heavy consolidation. Companies are getting bought out left and right. Dow Chemical bought Rohm and Haas for a 74% premium. And then Ashland came along and bought Hercules for a 38% premium. Companies that make low-margin chemicals are looking to beef up on companies that make high-margin, or specialty, chemicals. Because OMG is cheap and very profitable, it has to be on someone's radar. I hope that it doesn't get bought out. I think we'll do better holding the stock. But the deal-happy scene in the chemical business is another potential backstop of value here. Hard to believe that anyone could buy all of OMG for anything less than at least book -- which is $36 per share. And even that would bring howls of protest. After all, the stock was in the $50s for much of the past year. We will see. In any event, let's bring this back around to the aviation crisis. A familiar theme in the pages of my letters over the years has been this Templetonian notion of focusing on the opportunities that problems present. The late great John Templeton made this idea a key component of his investment -- and life -- philosophy. The high price of oil is a big problem for many industries. So if you have a good way to mitigate the high price of oil, you have a business. I think the big winners over the next few years are going to be those companies that have a solution to the high price of oil. Those companies have products that other people will pay up for, because fuel-efficiency is a must. The aerospace industry must become more fuel-efficient. Cobalt alloys will be a big part of that trend. This article was written by Chris Mayer for Whiskey and Gunpowder -END- | |
| July 17, 2008 Cobalt prices soften over summer, but bullish trader sees $150/lb possible next year Publisher: Metal-Pages | |
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- For the Information of Shareholders and Interested Parties Only - Dear Shareholder/Interested Party, Below find an article by Metal Pages regading the price of cobalt and future price projections: Cobalt falls to 9-month low LONDON (Metal-Pages) 17-July-08. The cobalt market has fallen to a nine-month low, trading at its lowest since November 2007, with market players saying they expect the price to fall further in the next few months. The price for high grade material was quoted at a range of $ 38-40/lb and Russian material was quoted at $ 35-37/lb. BHP Billiton lowered its screen offer price this morning by $ 2/lb to $ 40/lb and Norislk Nickel also lowered its inidcative price for 99.3% cobalt today to $ 37.50/lb down $ 1.5/lb from $ 39/lb. Traders reported that the cobalt market was trading at a $ 5/lb backwardation over the next three to six months. A UK trader said: "The market is in a fairly stiff backwardation - there is business going on in ever decreasing numbers and the theme continues with the prices moving down and I think they are going to move down further. People are trying to find buyers, BHP is looking to sell, but consumers are waiting until they need metal. There is no weakness in demand, it's just that consumers are not going to buy until the price is lower still." However, a more bullish trader said that while he anticipated further falls in the cobalt price in the next month, he expected the market to rally in September. "The lower it goes the bigger the bounce, I wouldn't be surprised to see the price at $ 150/lb next year - I think it will catch everyone by surprise," he said. He noted that Airbus has commissioned 40 billion dollars worth of aircraft over the next five years and that next year there will be demand for 5,000 tons of cobalt for hybrid cars. -END_ | |
| June 25, 2008 Cobalt prices are easing back toward $40/lb Publisher: Purchasing.com Author: Tom Stundza | |
| Domestic cobalt prices have declined 13% since the peak in March and some analysts believe they will slide further off the $45.50/lb average in June determined by Purchasingdata.com in a survey of buyers. The metal has averaged almost $49/lb in the first half of this year, compared with $30 in 2007 and $17 in 2006. Platts Metals Week's assessment for 99.8% cathode imports into the U.S. in the near futures has fallen to $44/lb for Zambian material and $43.50 for Russian and Australian metal. The near-future price from China, the largest foreign supplier, also is being reported as low as $40---a price last posted in December 2007---because of excess supply for world demand, which is highlighted by lagging 2008 demand in industrialized nations, including the U.S. Cobalt is used to make superalloys, chemical compounds for a variety of applications, cemented carbides and diamond tools, magnetic alloys and specialty steels and metallic alloys. The analysts say buyers are in no rush to buy cobalt while prices appeared to be falling. And traders interviewed by Platts still are seeing consumers coming in for small volumes on a hand-to-mouth basis. MetalBulletin.com, a subscription website, agrees that cobalt prices will drift down this summer in what it calls thin trading as consumers anticipate even lower prices in the weeks ahead. Looking ahead, some analysts see a pickup in pricing after Labor Day when hybrid car battery manufacture perks up after summertime vacations end. There are anywhere from 5 to 18 pounds of cobalt in every hybrid car battery. Even at 10 pounds cobalt per car, if the market did triple to 1.5 million units that would make 15 million new pounds of cobalt needed annually -- a substantial increase in a small 120-million-pound market. -END- | |
| June 18, 2008 Forest Service OKs new cobalt mine west of Salmon Publisher: Idaho Statesman Author: Statesman staff | |
| The developer will have to put up money to assure water quality and protection for endangered fish. The federal government has approved a proposed cobalt mine west of Salmon in central Idaho, subject to conditions. The U.S. Forest Service approved Formation Capital Corp.'s plan to mine cobalt - used in jet engines, batteries for hybrid and electric cars and other machines - in the Panther Creek drainage of the Salmon-Challis National Forest. "As we have firmly believed, a sustainable, responsible mine plan can be designed without compromise to the environment," said Bill Scales, president of the Vancouver, B.C., company's U.S. subsidiary. The agency will require Formation Capital to post financial assurances to guarantee long-term water quality management, forest Supervisor Bill Wood said. It also will require measures to protect endangered fish and to meet federal pollution-discharge rules. Formation Capital also must obtain administrative access and power line easements across adjacent private land prior to commencing ground-disturbing activities. The mine should not interfere with efforts to restore salmon and steelhead fisheries damaged by past mining at the adjacent Blackbird Mine site, he said. "This is possibly the most critical milestone the company has reached regarding the Idaho Cobalt Project," said Mari-Ann Green, CEO of Formation Capital Corp. Copies of the Forest Service's record of decision are available at the Salmon-Cobalt Ranger District office and Forest supervisor's office in Salmon. In addition, a copy will be available at the public libraries in Salmon and Challis. -END- | |
| June 17, 2008 Formation Capital shares soar on plan of operations approval Publisher: National Post, FP-Mining Author: David Pett | |
| Formation Capital Corp. got one step closer to building its Idaho cobalt project after the U.S. Forest Service approved a modified plan of operations for the proposed mine located in the Panther Creek drainage west of Salmon. Investors applauded the news, driving shares in Vancouver-based Formation up more than 9% to 72¢ in early afternoon trading Tuesday. "This is possibly the most critical milestone the company has reached regarding the Idaho Cobalt Project," stated Formation Capital CEO Mari-Ann Green "After years of permitting efforts, the Forest Service has issued a Record of Decision that outlines the required modifications to the mine Plan of Operations that, once incorporated, will allow us to commence construction of the mine and mill facilities." As part of the modified plan of operations, Formation Capital will be required to post financial assurance for long term water quality management and also address terms and conditions provided by the U.S. Fish and Wildlife Service and the National Marine Fisheries Service for management of endangered fishes. The company will also require the company to obtain a national pollution discharge elimination system permit from the Environmental Protection Agency. -END- | |
| April 28, 2008 Aircraft demand to keep hi-tech metals high Publisher: Reuters Author: Daniel Magnowski | |
| LONDON, April 24 (Reuters) - The global trend towards more frequent air travel should keep planemakers busy and in turn ensure prices of rare and hi-tech metals such as cobalt, rhenium and titanium stay strong for years. Often mined in inaccessible and risky territories, these metals are prized for their exceptional strength and heat resistance, making them essential for jet engines and airframes. "Two engines use twice as much cobalt and rhenium as one engine," said Stephen English, who trades cobalt for London-based merchant SFP (Metals). On Wednesday, Boeing's commercial planes unit said it would deliver 475-480 aircraft this year, rising to 500-505 in 2009. It delivered 441 commercial aircraft in 2007. "That's why we're in eye of the storm," English said. "Today, you have evidence that refined cobalt supply is 54,000 tonnes, and demand is between 61,000 and 65,000 tonnes." Though aluminium is the metal most widely used in aircraft, the aerospace industry represents only around 3 percent of world aluminium consumption, said consultant James F. King at an industry conference in Barcelona last week. Aerospace is by far a more crucial end market for less well-known, but much higher-value, metals. One of these is cobalt, a blue-tinted metal mined mainly in the Democratic Republic of Congo, Australia and Canada by firms including Camec, BHP Billiton, Xstrata and Vale. It trades at around $50 per lb on world markets -- making it more than 30 times more expensive than aluminium -- near to an all-time high, and up more than 50 percent since last April. In 2007, almost a quarter of the world's cobalt was used in materials known as 'superalloys' which are capable of withstanding temperatures of up to 1,100 degrees Celsius. Some 75 percent of these went into aircraft, according to figures from industry group the Cobalt Development Institute. Sustaining cobalt prices is the fear that as demand accelerates, supply may not be able to grow quickly enough to meet the world's needs. Though there are new mines scheduled to come on-stream around the end of the decade, many in the market are uncertain they will reach production as quickly as their owners plan. Power supply and infrastructure issues in the DRC may hinder project development, while the generally higher cost of bringing mines to production, linked to rising steel and energy prices, can lead to delays or cancellation, according to a presentation given by J. Scott Bending, president of Canadian metals explorer and refiner Formation Capital. "Very few entrants into the high purity cobalt market within the next decade are anticipated," he said. On Tuesday, mining firm Lundin said capital expenditure estimates for the Tenke project in the DRC, said to be one of the world's richest cobalt deposits, had doubled to $1.75 billion from last October's figure of $900 million. Several other projects in the DRC have been delayed, or production forecasts reduced. For a FACTBOX on Congolese cobalt mining. RHENIUM ROCKETS Another speciality metal to benefit from a growing aerospace industry is rhenium, which is mined in Chile, Kazakhstan and the United States. It sells for around $10,000 per kg, up around fivefold from late 2005, according to data from Anthony Lipmann, who trades metals for British firm Lipmann Walton & Co. Though prices have risen dramatically, buyers such as Rolls-Royce, General Electric and Pratt & Whitney, a division of United Technologies, have not cut their consumption of the metal. "Even at $10,000 per kg, the price as a proportion of a jet engine is peanuts," said a trader who attended the conference. Another metal used in aircraft engineering is titanium. China is projected to require 2,600 new jets worth $280 billion over the next 20 years, and India more than 900 large jets worth $100 billion within the same period, according to data from Mirko Grosso, account manager at titanium producer RTI International Metals. As more planes are built, world titanium demand from the commercial and military aircraft industries will grow, he said, putting demand for the ultra-strong metal at around 170 million lbs in 2015, up from just under 100 million in 2007. (Editing by Nigel Hunt) -END- | |
| March 24, 2008 Majors Under Fire in DRC Publisher: ResourceInvestor.com Author: Stephen Clayson | |
| LONDON (ResourceInvestor.com) -- The saga of the review of mining contracts being carried out by the DRC (the Democratic Republic of Congo) took a new turn last week as the country's government released the full text of the review, in French only, on its website. Mining companies active in the DRC were informed of the outcome of the review by the government last month, and some made announcements in view of this, but others did not, and those that did revealed little of substance. Therefore the full implications of the review were unclear, although it had been apparent since a leak in November last year that numerous 'renegotiations' and even cancellations of the contracts under which foreign miners were working in the DRC were in the offing. Now however, the cat is out of the bag, and it seems that the big boys, including Freeport-McMoRan [NYSE:FCX], BHP Billiton [NYSE:BHP; LSE:BLT], Anglo Gold Ashanti [NYSE:AU] and De Beers, are all in the line of fire. Freeport-McMoRan is undertaking perhaps the DRC's biggest mining project, the development of Tenke Fungurume, a gargantuan copper-cobalt deposit, and the DRC government has said that it wishes to renegotiate the terms of the project. Likewise, Anglo Gold Ashanti's Kilo gold exploration joint venture, where last year a 2.93moz inferred resource was outlined, is up for renegotiation, as are diamond projects held by BHP Billiton and De Beers. The DRC government participates in the country's mining industry through a small number of state mining companies, which hold equity stakes in projects and receive payments on behalf of the government, and it is these companies that will be the main beneficiaries of the renegotiations. Smaller Western companies active in the DRC include Anvil Mining [TSX:AVM; ASX:AVM], Katanga Mining [TSX:KAT], Metorex [JSE:MTX], the Central Africa Mining & Exploration Company [AIM:CFM], First Quantum Minerals [LSE:FQM; TSX:FM], Moto Goldmines [AIM:MOE] and Banro Corporation [AMEX:BAA; TSX:BAA]. Outlook It seems likely that the renegotiation process will rumble on for some time yet, and could conceivably result in undesirable outcomes for some operators. It is impossible to say exactly what sort of settlements may eventually be reached, or how long the renegotiation process will take. We have no way of knowing what discussions are taking place behind the scenes, and some companies have suggested that they will try and take the issue out of the DRC and into the international courts. How the government of the DRC would respond to such a move is unclear, but it is quite possible that the government sees the review as a starting point for talks, not necessarily as a collection of take it or leave it offers to the operators of the various projects concerned. That said - the DRC government would probably prefer not to have the renegotiating process too open to international scrutiny. After all, this is a country where the army makes a bit on the side by smuggling minerals out of the country and the leader of the opposition is in exile claiming that he fears for his life. Seemingly, the government of the DRC sees the rises in commodity prices since many contracts were negotiated as grounds for renegotiation in its favour, and feels that it can decide when rates of return on mining projects are 'excessive' and intervene to redress matters to its satisfaction. Sentiments like this are of course completely anathema to the investment community, which craves a predictable fiscal and regulatory environment when considering whether to undertake mining projects, and this is exactly what does not, and may never, exist in the DRC. The ever present undercurrent is that with the Chinese pouring money into Africa in general and the DRC in particular, Chinese groups may stand ready to pick up projects if current holders don't like the new terms being offered. Ultimately, the DRC's government is taking this line because it believes it can afford to. If commodity prices were at rock bottom, maybe investors just wouldn't bother with the country. If the Chinese weren't scouring the globe for resources and throwing money around to ensure they get them, maybe the Western mining companies would have a stronger hand to play. However, the DRC should be careful not to take things too far. In the environment of uncertainty and under the table horse trading that now exists in the country, marginal projects may not be developed, and the DRC will lose out. But projects like Tenke Fungurume are attractive enough that their operators may choose to bite the bullet and endure some turning of the screws by the government. -END- | |
| February 22, 2008 Cobalt sees another bull run Publisher: Metal-Pages | |
| LONDON (Metal-Pages) 22-Feb-08. The cobalt market is seeing another bull run similar to the gains seen at the end of 2007, with traders saying they expect the market to go higher and that Russian grade material will also soon hit the $50/lb mark. The current screen price for Russian material shown by Norilsk Nickel however is $46.40/lb, and this price was published on the 20 February. Meanwhile BHP Billiton raised its screen offer price to $52.50/lb this week following a sale of 5 tonnes of material at $51/lb on 19 February. However, BHP Billiton has yet to find takers at the $52.50/lb level. A trader said: "The bull run continues, the price will soon go to $60-65/lb, in the next year consumption is is expected to reach 75,000 tons and there is a 30% growth in demand. Consumers are ringing me up at midnight." He quoted a price of $51-53/lb for high grade material and $48-50/lb for Russian material. Another trader agreed: "The market is very strong, it has come into its own, consumers are short and are desperate for material for March delivery, they are looking for ways to pause the bull run but they can't he said, adding that demand is particularly strong from Japan. He quoted $52/lb for Falconbridge material and $47/lb for Russian material. However a third trader said that while there is no question the market is firmer, the bull's views are to be taken with a pinch of salt. "We have had a lot of enquiries, but have not bookd a lot of high grade material, customers are reluctant to pay the higher prices and no one will pay $50/lb for Russian material. The higher numbers are partly due to market manipulation," he said. -END- | |
| February 14, 2008 BHP-Billiton raises its cobalt offer price to $50 Publisher: Metal-Pages | |
| LONDON (Metal-Pages) 14-Feb-08. The BHP-Billiton cobalt website made a further 5 tonne sale into Asia this morning at the company's offer price of $49.25/lb. It follows a similar deal yesterday at $48.75/lb, its first screen sale since 6 February when it sold 15 tonnes into North America at $48.50. BHP-Billiton has subsequently moved its price up to $50/lb -- the market's target level and one which has been meeting a fair amount of resistance. One UK-based trader commented: "The next stage has begun. Now watch for the low grades to catch up." Russian producer Norilsk Nickel, meanwhile, maintains its offer price at $45.50, having sold 10 tonnes in one transaction at $45.55/lb last week. -END- | |
| February 06, 2008 Congo deals major blow to miners Publisher: MINING REPORTER Author: ANDY HOFFMAN | |
| Government reopens all contracts, saying it wants a bigger slice of profits Scores of mining companies hoping to tap the billions of dollars worth of mineral riches in the Democratic Republic of the Congo were dealt a major setback yesterday after the government indicated it wanted a bigger slice of their profits and said that all mining contracts would have to be renegotiated. Congo's vice-minister of mines Victor Kasongo said that a "brief and open" appeal process will be created to help "fast track" the renegotiations. In an address to a mining conference in South Africa, Mr. Kasongo said that when a government panel was formed last April to study the validity and fairness of 61 mining contracts, it expected it would have to rectify a few agreements. "We actually found that we had not a single contract that was properly constituted. What was meant to be a minor corrective has turned out to be multiple, major surgery," he said. -END- | |
| January 11, 2008 Cobalt price soars as stockpiles run low Publisher: telegraph.co.uk | |
| The slew of gadgets and gizmos unveiled at this week's Consumer Electronics Show in Las Vegas could soon become much more expensive to run than anyone had previously imagined. The latest news from the oil, mining and gas industries Cobalt, the key mineral used to make electric batteries, has soars to a new record high. Strong demand and scarce supply pushed prices in Europe to $46 a pound. BHP Billiton, the London-listed mining giant, was only willing to sell stock at $47.50 by close of trade, according to traders. The price has soared by about $5 in the past week and is 70 per cent above the levels seen a year ago. With stockpiles being run down, the price looks set to climb further. "There's no metal around, producers are sold out," said one European trader. Cobalt is a key component in manufacturing lithium-ion batteries, one of the most common types of rechargeable battery used in consumer electronics. Radioactive versions of cobalt are used in the treatment of cancer as a tracer that can monitor drugs passing through the body. It is widely used in the defence industry. The US Defense Logistics Agency has historically kept a large stockpile of the mineral to help secure the US military's needs. One London-based trader said the DLA held about 52m pounds of cobalt in 1993, but this has been whittled down to little more than 1.5m pounds. "The average rate of annual sales in those 14 years has been 1,650 tonnes per annum," the trader said. "At this rate of sales the DLA will have exhausted its cobalt stocks by June of this year." -END- | |
| January 03, 2008 US$50/LB COBALT PREDICTED Publisher: mineweb.com Author: Rodrick Mukumbira | |
| Cobalt price running wild on predicted big supply shortfall. Cobalt was perhaps overshadowed by gold and uranium and other base metals during 2007, but the metal's price is accelerating on tight supplies and a predicted big shortfall as demand grows fast. It is not as luxurious as gold or as hot as uranium, but cobalt left its mark in 2007, as the former and the latter overshadowed its profile. Speculative buying and consumer demand in the face of supply constraints in the Democratic Republic of Congo (DRC) and the depletion of US government's and former Soviet Union's stockpiles saw the price for the metal surging over 60% in 2007, the highest since a modern market for cobalt trading was established in 1978. The cobalt market is currently tight, with producer stocks either said to be sold out or running low, resulting in BHP Billiton and Russia's Norilsk Nickel repeatedly increasing offer prices at every sale. At the beginning of 2007, the average offer spread cobalt price stood at about US$25 per pound, an increase of about US$12 per pound from the beginning of 2006. The price soared to US$40.25 at the end of the year due to surging demand for batteries for mobile phones and hybrid cars as well as supply constraints following a moratorium on the export of raw concentrates from the DRC in October. Since the early 90s, cobalt prices had been held down by sales of the US government's stockpiles, and low grade cobalt material from the former Soviet Union, which have largely depleted, according to a Gold Editor Stock Info report. China increased its consumption to a fifth of global production last year - up from 3% a decade ago, according to Resource Investor, and political concerns following a return to conflict in mineral rich northeastern DRC has had investors worried that production could be constricted. The Financial Times reported this week that shipments from the DRC, an important supplier, have almost dried up since October when the central government banned concentrates from leaving the country. Nevertheless, cobalt's public profile is set for further heightening. Cobalt is largely a copper and nickel mining by-product, with annual production rarely exceeding 65,000 tons, and is now found in a growing range of rechargeable batteries, super alloys such as turbine blades in jet engines, chemicals such as dyes and pigments, wear resistant alloys, catalysts including gas-to-liquid converters, and high performance magnets. Independent statistics say over the past four years, cobalt use in rechargeable batteries has grown by nearly 300%, the fastest growing segment being the metal's use in fuel-efficient hybrid cars, as the world looks for ways of reducing air pollution and fuel consumption. The Financial Times report said a battery containing about 2.5 kilograms of cobalt powers the Prius, Toyota's fuel-efficient hybrid car. It quotes auto industry consultants JD Power forecasting that US hybrid-car sales will increase from about 350,000 this year to just over one million by 2012. Sales of cell phones and laptops are also surging boosting the fortunes of the metal. This week cobalt for January delivery hit a record-high price of US$45 per pound, according to BHP Billiton's cobalt open sales website, pointing to approximately 50% price increase since January last year. BHP Billiton, which controls over two percent of the market, sold five tonnes of 99.80% cobalt on December 14 to Europe at US$43, up US$3.75 from its December 7 sale and US$5.25 from its November 29 sale. Norilsk Nickel was offering the metal at over US$43 per pound. "The horse has broken out of the stable and is breaking into a full speed stampede, so it's difficult to know where it will end by the time its passions are fully spent," said a bullish trader quoted by Metal-Pages. Banking group Credit Suisse, which in September inaugurated a market in hi-tech metal cobalt for investors seeking a stable commodity contract, is also confident. Late last month it raised its average price target for cobalt this year by 50% predicting a US$50 per pound price. "The cobalt market should remain tight, underpinned by tightening short term supply and surging demand," Credit Suisse is quoted as saying, adding "Cobalt prices could spike to $50 per pound in the short term if supply continues to dry up while demand remains strong. "We believe consumption particularly from China shows no signs of slowing and global demand for cobalt could grow as much as 7% per annum from 2007 to 2009." The banking group also predicted a supply deficit of 1,680 tons next year. -END | |
| December 27, 2007 Why the Run-Up in Cobalt Demand? Publisher: ResourceInvestor.com Author: Jack Lifton | |
DETROIT (ResourceInvestor.com) -- The following price charts from the excellent new Internet minor metals information center MinorMetals.com, published by TheBullionDesk.com, clearly show the roller coaster ride that cobalt has been on during the last six months in particular, and the last two years in general. In the earlier period cobalt first doubled and then plateaued. Now in the last six months of 2007 cobalt prices have gone up another 50% above the base established during the plateau period. The total increase in price of cobalt over the last two years has, as of now, been 300%; thus cobalt has been a far better investment during the last two years than either gold or platinum.
Is the current cobalt price run-up a "bubble", or the froth around a bubble, or is it a solid movement in demand that is running ahead of supply? There are just two reasons why the price of a natural resource goes up: 1. The real (actual) demand exceeds the supply, or; 2. Speculative demand exceeds supply. I believe that cobalt is going up in price because of a combination of the above two factors. First of all the existing uses for cobalt are growing and show no signs of moving to substitute materials. Second, a "new" cobalt use, which has so far flown under the investment radar, has begun to grow, and I believe that this has initiated a speculative surge in demand among commodity market players and a surge of risk management by the purchasing departments of some large corporate end-users of cobalt. The first factor to be noted in trying to form an understanding of cobalt pricing and supply is the fact that "cobalt is not found as a native metal but generally found in the form of ores. Cobalt is usually not mined alone and tends to be produced as byproduct of nickel and copper mining activities.... In 2005, the Democratic Republic of the Congo was the top producer of cobalt with almost 40% of the world share, followed by Canada, Zambia, Russia, Brazil, and Cuba." The USGS notes that "The United States did not mine or refine [any] cobalt in 2006," but that the U.S. imported for consumption 11,800 metric tonnes of cobalt in 2006. Since the USGS gives total mine production of cobalt globally in 2006 as 57,500 metric tones, it is clear both that the U.S. is a major consumer of cobalt and that cobalt is truly a minor metal when compared to copper and nickel, from the ores of both of which it is principally extracted, as a byproduct. An excellent and comprehensive discussion of the current strategic and critical applications of cobalt is to be found in the October 2006 issue of the Journal of Metals, which is a subscription only publication for members of The Metals Society, a first-class organisation for those interested in technical metallurgy. I will summarize the article briefly: It says that "Cobalt has played an important part in the composition of nearly all the new alloys developed since the 19th century for cutting tools and wear resistance. The special properties of cobalt have been utilized in such applications as catalysts, paint dryers,..., and rechargeable battery chemicals. ...Superalloys are major applications.... The major uses of cobalt based superalloys (45% cobalt) are in turbine blades for aircraft jet engines and in gas turbines for pipeline compressors." Of special interest from the article is the comment that "Cobalt-based batteries are...[an] extraordinary application where the use of cobalt in rechargeable batteries grew enormously between 1995 and 2000....The addition of cobalt to the electrodes substantially enhanced the cell's life, increased [nickel metal] hydride thermodynamic stability, and inhibited corrosion." Finally, note the final paragraph of the article especially the last sentence, which I have put in italics: "The increasing use of cobalt in rechargeable batteries for electric vehicle applications is expected to increase the use of cobalt even further. A major shift to hybrid-electric vehicles in automotive technology will dramatically increase the demand for cobalt-based batteries. Newly emerging demand combined with increases in cobalt use for other types of turbine engines and gas-to-liquid catalysts is underpinning the recent growth in cobalt demand and is expected to drive future cobalt consumption to unprecedented levels." Toyota has just announced this month that it plans to manufacture 1 million hybrid-electric vehicles a year sometime in the 2010's. It is clear that even if Toyota's goal is not met in the actual year of 2010, the total number of hybrids made that year just by Toyota, GM and Honda will meet or exceed 1 million units. This fact is, in my opinion, the principal driver today of cobalt prices. Let's look at the numbers: At least 1.5 million hybrid vehicles have been manufactured since Toyota introduced the first mass produced vehicle of this type, the Prius, in 1999. Toyota alone has already made 1 million of them and 79% of all of Toyota's hybrid vehicles have been sold in the U.S. I have frequently reminded readers of Resource Investor that the nickel metal hydride battery packs used in a Prius contain up to 300 pounds of nickel and as much as 64 pounds of rare earth metals, principally lanathanum. Today I want to point out that each battery pack also contains cobalt. The comprehensive article "Developments in hybrid vehicles and their potential influence on minor metals", written and presented in 2005, contains the graph below and the surrounding commentary: 
The conclusions and graph above are based on the premise that future hybrid vehicles will continue to use nickel metal hydride batteries; I personally predict that some, and perhaps, even all, hybrids will utilize safe reliable nickel metal hydride batteries at least as far into the future as the above graph runs. All of the "new" cobalt demand coming just from hybrid vehicle nickel metal hydride battery construction is today probably already in excess of market supply. Cobalt production has tripled in the last 12 years from 20,000mt per annum in 1995 to nearly 60,000mt per annum in 2007. Production will have to increase by another 25% just to keep in equilibrium with the above forecast hybrid demand and the natural growth in existing uses. A friend of mine warned me on the phone today that there is a high probability of a downside to this optimistic view of demand exceeding supply. He said that if a safe reliable lithium technology battery is developed for hybrid vehicle operation then cobalt will immediately be in surplus and the price will crash from today's highs. Let's examine his thought a little. The highest energy density most efficient lithium technology battery available today, which is almost universally used in laptops, cell phones, and even concept cars is the one based on lithium/cobalt oxide electrode technology: the so-called lithium ion battery. I have written before that the world's largest lithium producer, Chile's SQM [NYSE:SQM], and the General Motors Corporation both agree that an optimum size lithium-ion vehicle propulsion battery would need 2 kilograms of lithium. The (reversible) chemical reaction that describes the operation of this widely used battery is: 
The above equation tells us that a battery pack utilizing 2 kilograms of lithium will require 8.4 kilograms of cobalt or 18.5 pounds; this is six times as much as the current nickel metal hydride batteries! So, if nickel metal hydride battery packs were converted to lithion-ion, cobalt type, batteries then the 2015 demand just for such batteries of cobalt would be nearly 50,000mt annually or the equivalent of nearly all of today's annual supply! Take heart, though, because we are told that all kinds of newer cheaper and safer lithium ion battery technologies are "being developed." But, in the meantime.... Ultimately I would predict that a compromise will be reached. I think that a large proportion of workaday hybrid vehicles will be made and continue to be made with nickel metal hydride batteries; some of the rest will be made with exhaustively researched and more safely designed lithium cobalt ion batteries; and the top few performance types will use one of the non-cobalt based lithium ion battery technologies. I say this because it is clear that end-users are bidding up cobalt prices to insure their supplies for the near term production of items like superalloys where cobalt is absolutely critical and cannot be substituted, and that battery makers are hedging their bets on the future composition of the end-use hybrid battery market by laying in supplies of the metal even as, and, in particular, in case that, the global economy slows down because they recognize that since cobalt is a byproduct, a drop in either copper or nickel demand immediately impacts not only the supply of those metals but also of cobalt. The battery makers know that the demand for hybrids may well rise if the price of oil continues to go up and that hybrid vehicle customers will not wait forever for new battery technologies. Dollar investors, take note: At this point I want you to keep in mind that the increase in demand for cobalt for the new hybrid battery use is coming today entirely from outside of the United States. Essentially all vehicular hybrid batteries are today being made in China and Japan. China and Japan both believe in national stockpiling by government funded agencies for critical metals. Private Japanese "trading" and mining companies and both "private" and state-owned Chinese trading and mining companies are today diligently scouring the world for sources and supplies of critical and strategic metals such as cobalt, nickel and lithium because, for example, in the case of cobalt, they are worried about the most extreme of the above scenarios. The Chinese are concerned first and foremost with keeping their domestic economy fed with the natural resources it needs. The Japanese also have this as a goal but it is to ensure their survival as a trading nation as well. In either case cobalt, among other resources, will be mostly unavailable in the global market place after it is acquired by China or Japan. Should the Japanese and Chinese succeed in locking up most of the additional supply of cobalt to be created during the next decade and the most extreme of the above demand scenarios materialize, it will be a significant blow to American heavy industry and the U.S. military. In the case of civilian industry, it could result in the acceleration of its relocation to China. -END- | |
| December 13, 2007 Cobalt driven to new record high by strong demand Publisher: Reuters Author: Reporting by Pratima Desai; Editing by Michael Roddy | |
| LONDON, Dec 13 (Reuters) - Cobalt prices on the spot market in Europe have risen to record highs near $40 a pound this week, driven by rising consumer demand and speculative buying, traders said on Thursday. The metal COB-CATH-LON used to make batteries and aircraft components was trading at $39.5 a pound compared with $38/$39 a pound last week. Prices are up by nearly 50 percent since January. "Demand has been strong and is getting stronger. There is some speculation involved as well," a UK-based trader said. "But the move is fundamental ... China is really struggling to get the raw material for processing cobalt." Traders said a lot of Chinese producers had closed because they couldn't get the concentrate, partly because of supply problems in the Democratic Republic of Congo. Rising demand from battery makers also played a part. "As contract negotiations come to an end, consumers have been diving into the stock market," a Europe-based trader said. London-listed miner BHP Billiton (BLT.L: Quote, Profile, Research) last sold high grade cobalt at $39.75 a pound and is offering at $43 a pound. "$43 is a little optimistic now, we may get there next year," the UK-based trader said. Cobalt COB-ING-LON from Russia's Norilsk Nickel (GMKN.MM: Quote, Profile, Research) last changed hands at $36.59 a pound. Norilsk is now offering at $38 a pound. -END- | |
| November 29, 2007 BHP Billiton Sells Cobalt at a Record $37.75 a Pound Publisher: Bloomberg Author: Chanyaporn Chanjaroen | |
| BHP Billiton Ltd., the world's largest miner, sold cobalt for a record $37.75 a pound on expanding demand for the metal used in rechargeable batteries. The Melbourne-based company sold 5 metric tons for December delivery to Europe, it said today on its cobalt sales Web site. BHP is offering 5 tons at $39.75 a pound for December delivery. Yesterday, the company sold 5 tons for November delivery at $36.75 a pound to North America. "Demand is fairly strong, especially from China," said Calum Baker, research manager in steel raw materials at metals consultant CRU in London. "There has been an expectation of a supply shortfall in Congo.'' The metal has advanced more than 38 percent this year, with demand expected to expand 6 percent in 2007 and 5 percent in 2008, according to CRU. The advance has spurred takeovers in the cobalt-mining industry, including a $2 billion bid by Katanga Mining Ltd. for Nikanor Ltd. this month. The two combined would become the world's largest cobalt producer by 2011. -END- | |
| November 27, 2007 Cobalt, magnesium and bulk alloys lead the markets - November 2007 Publisher: Metal Pages | |
| Cobalt has been riding high over the past month where many other markets failed to pick up after a slowdown in the third quarter. The weak dollar had some part to play in this, with UK traders reporting both an increase in enquiries and requests by sellers to be paid in sterling. Having topped $30/lb in mid-October the market continued moving steadily upward towards $35/lb, buoyed by both a shortage of material available in the spot market and bullish sentiment, which has seen investors start taking positions in the market. The London Metal Exchange is also, once again, turning its eye to cobalt to determine whether it, along with other minor metals, could feasibly trade on the exchange. There are mixed feelings on whether the minor metal markets are liquid enough and would be open to the kind of transparency that the LME requires. A poll by Metal-Pages, however, came out with a surprisingly balanced result, with a small majority of those responding happy to see their metal trade on the LME. Having opened a market in cobalt futures to investors in September, Credit Suisse said the market has been even more successful than expected. This, and the fact that cobalt is already sold on open online systems by producers, makes this metal probably the most obvious candidate for trading on the exchange. At the moment, producer stocks are said to be either sold out or running low and a small volume of five to ten tonnes is enough to move the market. On their online trading systems, BHP-Billiton and Norilsk Nickel have been leading the way by repeatedly increasing offer prices with every sale. BHP-Billiton moved its offer price up to $35.50/lb on November 21, having reported a five-tonne sale to North America at $34.75, the highest transaction price ever recorded on its website, while Norilsk Nickel raised its website offer price up to $33/lb on November 22. Previous to that BHP-Billiton had raised its offer price on 16 November, for the second time in two days, to $33.30/lb on the back of a five-tonne sale. Norilsk Nickel had moved its offer price, first to $31.20/lb on 14 November and then to $32/lb on 19 November, basis in warehouse Rotterdam. In China, Jinchuan Group also lifted its price for 99.8% cobalt metal on 20 November to Rmb578,000/tonne, up from the previous Rmb566,000/tonne basis which has been in place since 9 November. Not everyone is happy with the rising market. Said one major western consumer/processor: "The market is clearly the hostage of an incredible sense of opportunism... With each quote the Russians move up their price and we have another hit or two on BHP... It is not always easy to beat the bulls. We still believe that the hike is on the basis of speculation and not fundamentals, but the end result is unfortunately the same." He put the market, in the penultimate week of November, for 99.3% at $32-33/lb and for 99.8% at $33-34.50/lb, against a more general market range of $33-33.75/lb for 99.3% and $34-35 for high grade. Previously, the price of cobalt, has topped $30 per lb just three times since the mid-1990s: March, 2007, January 2004 and February 1996. There are now enquiries for 2008 and demand is also said to be boosted by consumption in China, particularly for making batteries. In China prices for all cobalt products are rising, as availability of raw materials gets tighter. Concentrate prices are now quoted at $28-29/lb. Some producers are said to have halted production and have started to trade raw materials as they have difficulties raising the cash. Prices towards the end of November went up to about Rmb630-640/kg ($38.6-39.2/lb) for 99.8% cobalt metal, some Rmb450/kg (US$27.6/lb) for 72% min Co cobalt oxide, while offer prices for industrial chemical cobalt oxalate, used in manufacturing automotive tyres have also gone up, to Rmb190,000-Rmb195,000 (as high as $26,351/tonne) for 31% min cobalt oxalate. Cobalt has a wide variety of applications in industrial chemicals, batteries, aerospace alloys, land-based turbines and power generators. It is likely to see a growing demand in hybrid vehicles, as the automotive industry strives to be cleaner but still affordable. Japanese car manufacturer Daihatsu Motor Co recently unveiled its new fuel cell technology that eliminates the need for platinum in electrode catalysts. By changing from acidic to alkaline electrolyte membranes it can replace the costly metal with cheaper and less corrosion resistant metals such as cobalt or nickel. Note: The article continues on to discuss other commodities. For a complete copy of the article the reader is referred to Metal Pages November Newsletter located at www.metal-pages.com | |
| November 23, 2007 Cobalt nears record $35 per lb Publisher: Reuters Author: Daniel Magnowski | |
| LONDON, Nov 23 (Reuters) - Miner BHP Billiton (BLT.L: Quote, Profile, Research) sold cobalt at a record $34.75 per lb this week and on Friday offered the hi-tech metal at $35.50 per lb, with traders saying that free market prices were poised to rise towards $40. Cobalt (COB-CATH-LON: Quote, Profile, Research) has risen more than 25 percent since the start of the year and is now at its highest in dollar terms in more than 20 years, dealers said. The most expensive sale recorded on the BHP website is $34.75. "When BHP gets booked again it will go to $36 and higher, but it will do it stage by stage," a British dealer said. "It's sustained because it's based on fundamentals. Buyers are looking for long-term contracts for next year but there aren't going to be enough cobalt units around," he said. Many in the market predict that demand will outstrip supply next year as engineering firms use more metal in batteries and aircraft components. New sources of supply, from the Democratic Republic of Congo in particular, may face delays in reaching full production. Russian mining firm Norilsk Nickel had lower-grade metal (COB-ING-LON: Quote, Profile, Research) on sale at $33 per lb, and another trader said metal was changing hands on the spot market between this level and $34 per lb. In other minor metals, steelmaking additive ferro-molybdenum (MLY-FERRO-LON: Quote, Profile, Research) traded slightly lower at $74-75 per kg for Western-grade material delivered in Europe, down from $74.50-75.50 last week, while Chinese-origin (MLY-F60-LON: Quote, Profile, Research) was sold at around $72 per kg, merchants said. Ferro-tungsten (TUN-FERRO-LON: Quote, Profile, Research) slipped fractionally to $33-33.50 per kg and ferro-vanadium (VAN-FERRO-LON: Quote, Profile, Research) lost around $1 to $36.50-37.50 per kg. Dealers reported little spot business as consumers were more interested in long-term deals for 2008. "It's quiet because nobody's buying for December delivery, instead they are talking about next year," a European alloys dealer said. Many long-term contracts use published metals prices as the basis of pricing formulae applied for the duration of the deal. On Thursday, alloys and minor metals trading firm Wogen (WGN.L: Quote, Profile, Research) said preliminary results for its full year would be ahead of market expectations. [ID:nWLB3514] Johnson Matthey (JMAT.L: Quote, Profile, Research) said this week it was considering building an auto catalyst plant in Macedonia. [ID:nL22276278] (Reporting by Daniel Magnowski, editing by Peter Blackburn) Reuters, 2007 -END- | |
| November 16, 2007 Credit Suisse successfully establishes market in cobalt Publisher: Metal-Pages | |
| LONDON (Metal-Pages) 16-Nov-07. Credit Suisse has said that its hedging market in cobalt metal opened to investors in September this year has been more successful than expected. Kamal Naqvi, Head of Hedge Fund Coverage in the Commodities group at Credit Suisse said that Credit Suisse had been trading cobalt in reasonable volumes and that a number of trades had been conducted by producers and consumers as well as some private investors. However, he declined to comment on the exact volume of cobalt that had been traded. Naqvi said that in the absence of a futures market for cobalt, Credit Suisse has created the opportunity for clients and corporate investors to take exposure to cobalt and offer them a cash settled swap against the actual average of a particular period. Since cobalt is not traded on any of the world's metal exchanges, the contract is priced against Metal Bulletin's twice weekly settlement price which is the industry benchmark. Credit Suisse set up its cobalt futures trading in response to concern from investors about the level of intraday volatility in the LME base metals markets due to the US dollar and the equity markets. It was also responding growing demand from investors to look at a wide range of commodities. Naqvi said that he did not believe that the financially settled cobalt swaps directly affected the price of physically-traded cobalt but accepted that its introduction had become a popular point of discussion in the industry. He also said he remained bullish about the market due to supply disruptions in the Congo, coupled with robust demand. The bullish sentiment and investment funds' involvement in cobalt have been cited as one of the factors propelling cobalt prices to their current levels. As well as a perceived fundamental shortage and the fact that supply is now consolidated in the hands of a small number of producers and trading houses, the introduction of cobalt futures hedging is actually said to be boosting the upward momentum in prices which reflects on the physical market. Prices edged higher late this week on the back of bullish sentiment with traders quoting prices between $31.45-32.30/lb for high grade (99.8% Co) material and in the range of $30.50-31.50/lb for Russian grade metal. Producers website offer prices also went up, with BHP-Billiton raising its price to $32.80/lb yesterday on the back of a small 5 tonne sale to North America on 15 November at $32.30/lb. The company hiked its online price again today to $33.30/lb offering 5 tonnes, after making a further 5-tonne North American sale, this time at $32.70/lb. Norilsk Nickel lifted its offer price to $31.20/lb on November 14, also reflecting the strengthening market. The Russian producer sold 22 tonnes, in five transactions to four consumers last week, at an average price of $30.41/lb. -END- | |
| November 13, 2007 Norilsk moves up price as cobalt breaches $40 Publisher: Metal Pages | |
| LONDON (Metal-Pages) 13-Dec-07. The Russian producer Norilsk Nickel moved up its cobalt website price to $38/lb today, as trade sources acknowledge that high grade has finally hit $40. BHP-Billiton has yet to make a sale since 7 December ($39.75) but its offer price remains firm at $43/lb for December delivery, reflecting the belief that if consumers want the metal, they're going to have to pay a premium for it. A major UK-based trader reported a 5 tonne sale of Falconbridge for January delivery yesterday, at $40.50/lb, demonstrating that nearby resistance to $40 has been broken. Even the more bearish observers concede that the market for high grade is now at $40. Said one European trader: "I haven't sold at that level yet -- my highest price for 99.8% is $39.75 -- but the market is now at $40. A lot of consumers still need to buy metal. With cobalt production costs at just $8-9/lb a $40 price isn't logical -- but there is no business for logic in this market. Price could continue firm throughout next year." This is an opinion shared by more than a few, who can see no end to the cobalt bull run. -END- | |
| October 11, 2007 Cobalt continues to firm Publisher: Metal-Pages.com | |
| LONDON (Metal-Pages) 11-Oct-07. The cobalt market continued to firm this week, with both BHP-Billiton and Norilsk Nickel moving up their website offer prices to $30 plus. BHP-Billiton has made three sales this week at $29.90/lb and, subsequently, edged its offer price up to $30.25, just above psychological $30 mark. Russian producer Norilsk Nickel increased its 99.3%-graded cobalt offer price to $30/lb, having sold 30.5 tonnes of material in five transactions to four customers at an average price of $30.29/lb last week. It is 99.3% metal which is the most actively traded, and European traders say the bottom of this market is firmly at $29.50. The more bullish put the market for 99.3% at $29.75-30.50, with 99.8% at $30-30.50. The margin between the two is diminishing all the time, as 99.3% grades sets the pace. Another indicator of prices this week was the United States Defense Logistics Agency (DLA), which put 52,862.49 pounds of surplus cobalt up for tender Wednesday. European traders said offers were made in the mid to high $29s. Supported by booming demand and the added prospect of a Credit Suisse cobalt contract, prices are unlikely to take a dip in the near term. -END- | |
| October 08, 2007 Hedge funds eye minor metals Publisher: Reuters Author: Daniel Magnowski - Analysis | |
| LONDON (Reuters) - For years the preserve of globe-trotting merchants and secretive financiers, the trade in rare and valuable minerals known as minor metals is now on the radar of hedge funds searching for profits. Huge amounts of money have been ploughed into higher-profile commodities such as copper and oil since the start of the decade, but the outlook for less well-known metals is fundamentally very strong, traders and fund managers say. Cobalt, a metal mined in countries including the Democratic Republic of Congo, Zambia and Russia for use in aerospace engineering and in power station components is increasingly popular. Nick French, a cobalt dealer at London trading firm SFP Metals, said cobalt is attracting a lot of attention from the investment community. "This year there has been hedge fund interest, the logic being that if you can push the price of cobalt up to $40 per lb from $20, then the share price of a cobalt mining company will double," French said. High-grade metal (COB-CATH-LON: Quote, Profile, Research) is trading around $30 per lb, up only slightly from the start of the year but more than 60 percent higher than its price in October 2006. Investment bank Credit Suisse (CSGN.VX: Quote, Profile, Research) predicts it could cost $40 by the end of the year. The bank itself broke into the market this year when it launched a financially-settled cobalt contract. "The Credit Suisse contract is backed by its alliance with Glencore, so between them they have the financial clout, the physical backing and the necessary market intelligence," French said. "In theory, it gives the market a whole new layer of liquidity, and opens up the market to people who wouldn't otherwise be able to use it by overcoming the problems of lack of liquidity and lack of transparency." There are also plans afoot at the London Metal Exchange (LME) to examine the possibility of a futures contract for cobalt, which could theoretically make it as easy to invest in the minor metal as it is to invest in copper (MCU3: Quote, Profile, Research), one of the most popular assets in this decade's commodities boom. "In cobalt and molybdenum, we do have interest," LME Chief Executive Martin Abbott said. "There has been contact from members of the minor metals trade ... which was on the positive side. We will do some proper research in the first few months of next year." Though cobalt is one of the highest-profile of the so-called minor metals, it's not the only one to draw the eyes of hedge funds. Mark Mobius, head of Templeton Emerging Markets (TEM.L: Quote, Profile, Research), said his firm had price targets for several minor metals. "Generally we are optimistic that metals like antimony, bismuth, molybdenum and others will remain high and could even go higher." Bismuth (BIS-LON: Quote, Profile, Research) prices have doubled this year, while antimony (ANT-HG-LON: Quote, Profile, Research), used to make plastics and fibers fireproof, is trading around 13-year highs as China, which supplies around 90 percent of the world's metal, shifts to being both a producer and consumer rather than just a source of metal. CHINESE RESERVES? Chinese domestic use of the metals it in the past exported in greater quantity to processors and end users in Europe and the United States, will continue to be a major theme in the minor metals markets. Beijing imposed export quotas on indium and molybdenum in June and is believed to speeding up a scheme to build up a national reserve of minor metals including indium, a key material for flat-screen TVs, in order to support domestic hi-tech industries. "The reserve will come sooner or later, I believe the quota is just the first step," said a trading manager at a smelter in China's Liaoning province. Feng Juncong, analyst at state-run research agency Antaike, said building reserves could mean higher prices for metals such as indium. "The government wants to support its flat panel TV industry, whose development is facing a bottleneck as the country's indium processing industry is quite weak," Feng said. "I think a title of national reserve will raise the metal's profile and there will be more policies to encourage Chinese indium high-end production." A senior official at the Mines and Metals department of the China Chamber of Commerce of Metals, Minerals & Chemicals Importers & Exporters said the government had started discussing reserve-building with major producers. "It has not yet entered into a practical period, but it is an urgent issue," he said. "It is easy to understand -- China is in the middle of its industrialization and needs plenty of resources." -END- | |
| September 26, 2007 Cobalt forward deals breach $30, nearby also firms Publisher: Metal Bulletin Ltd | |
| London 26 September 2007 15:21 - Cobalt sales for next year have breached $30 a lb, evidence of growing tightness in the market, observers said. A series of trades In the early part of 2008 have already been agreed for both high-grade and low-grade metal at above $30. Additionally, Credit Suisse/Glencore have completed a paper deal to a hedge fund above $30 to be settled against the December average, MB understands, as part of some 300 tonnes' worth of cobalt futures that have already been agreed. "It's symbolic," said a London trader. "We're close to bursting the skin on the pudding." Although spot deals have slowed, prices have yet to weaken, and the market remains in a healthy contango, participants said. "The market seems very strong, there are no numbers below $28," said a second London trader. "There are no signs of weakness, no-one is undercutting the market." Low grade cobalt rose to $28.25-29 from $27.75-29 although high grade was steady at $29-29.75. Demand from the superalloys sector is high and the recent conclusion by major European consumer Umicore of fourth quarter deliveries at less favourable terms to it than in the third quarter shows the battery sector is strong, traders said. On the supply side, output remains under pressure with Xstrata's Nikkelverk refinery still producing below par - output fell 24 percent in the first half of the year to 1,920 tonnes due to reduced feed while Chambishi Metals continues to suffer quality problems following an outage earlier this year. Concerns regarding stability in the Democratic Republic of Congo will also underpin the market, traders said. Still, business is thinner than in recent weeks, and Norilsk's acknowledgement on its website it sold at $27.53 per lb last week, down from $27.65 the previous week, could indicate weakness to come, a buyer said. Copyright (c) Metal Bulletin Ltd. All rights reserved. | |
| September 20, 2007 China to become the world's biggest buyer of aircraft over the next 20 years Publisher: Excerpt from The Gartman Letter Author: Donald Berman | |
| As reported in "The China People's Daily" regarding China's appetite for aircraft going forward: As China leaps into the 21st century, she will be the biggest buyer of aircraft and engines over the next 20 years. This is not a forecast from Beijing; this is a forecast from Rolls-Royce, the maker of so many of the jet engines these aircraft will be powered by. With passenger traffic growing at 8.8% per year, Chinese airlines need to buy over 3,100 new aircraft and therefore 6,600 engines worth over $65 billion, according to Rolls-Royce. We are talking several tens of billions of dollars annually in the engine arena alone over the next decade. Further, the Asia-Pacific market should take as many as 26,000 new engines over the two decades. These are not inexpensive pieces of equipment, and Rolls-Royce believes that Asia is, and will be, the key market for new aircraft with engines... and Asia will take them regardless of the Renminbi's value. -End of Excerpt- | |
| September 14, 2007 More uses for Cobalt - Platinum Falls as Daihatsu Develops Fuel Cell Without Platinum Publisher: Bloomberg Author: Marianne Stigset | |
| Sept. 14 (Bloomberg) -- Platinum fell in London after Daihatsu Motor Co. said it developed a new fuel cell that doesn't use the precious metal, prompting speculation demand may decline from carmakers, the biggest consumers. Daihatsu, Japan's largest minicar maker, today said it is seeking to replace platinum with cobalt and nickel. A typical fuel cell for a car uses 200 grams, or more than six ounces, of platinum, the company said. The announcement ''triggered some reactionary selling,'' said Rory McVeigh, a senior platinum trader at Commerzbank AG in Luxembourg. Still, ''I can't see myself driving a fuel-cell car for another 20 years.'' Platinum for immediate delivery fell $7, or 0.5 percent, to $1,289 an ounce as of 11:14 a.m. in London. Carmakers used about 4.2 million ounces of the metal last year in autocatalysts, equal to 62 percent of total demand, according to London-based metals trader Johnson Matthey Plc. Palladium, also used by carmakers, slid $2.25, or 0.7 percent, to $330.50 an ounce. To contact the reporter on this story: Marianne Stigset in London at mstigset@bloomberg.net -END- | |
| September 05, 2007 Cobalt investment contract launched by Credit Suisse Publisher: mineweb.com Author: Daniel Magnowski | |
| LONDON (Reuters) - Credit Suisse has opened a market in hi-tech metal cobalt to investors seeking a commodity contract that won't be buffeted by turbulence in other financial markets, the bank said on Tuesday. Cobalt, a metal mined in Africa, Russia, Cuba and Australia, and used in batteries and aircraft engines, is not traded on an exchange, so until now the only way to invest in it has been to buy the metal and store it -- often not an option for hedge funds. But the new financially-settled contract launched in August by Credit Suisse makes it possible to buy cobalt without ever taking delivery of the metal, the bank told Reuters in an interview. "It works likes other commodity contracts. For example, if you buy Dec 07 cobalt today at a fixed price of $24.80 and come December, the average for the month prices out at $30.00, then you net receive $5.20. It is purely cash settled," said Lorcan Cleary, Vice President in the commodities group at the bank. Since cobalt is not traded on any of the world's metal exchanges, the contract is priced on data published by industry journal Metal Bulletin. "We have taken the proactive step of providing access to a market in the absence of an exchange," Cleary said. A cobalt contract makes sense now because speculators are looking for new products in which to invest after several years of pumping money into commodities. While exchange-traded commodities such as copper and gold fell victim to the recent global financial turmoil that began with the collapse in the sub-prime mortgage sector in the United States, off-exchange metal cobalt is detached from shockwaves in other markets. "One of the attractions of the 'new' commodity markets, such as cobalt, is that they avoid the short-term correlation that the more commonly financially-traded commodity markets are currently seeing," said Kamal Naqvi, Head of Hedge Fund Coverage in the Commodities group at Credit Suisse. "Clients are seeing such markets as cobalt and coal as purer commodity plays." Among commodities, cobalt's fundamentals are especially attractive, Credit Suisse believes. The bank has forecast that cobalt prices could spike to $40 per lb by the end of this year. High-grade cobalt now trades around $27 per lb, up 50 percent since September 2006 on strong industrial demand and tight supply. "We expect the cobalt market to remain in deficit until the end of 2008, as supply struggles to keep up with strong demand," the bank said in a research report earlier this year. The fact that around half the world's cobalt reserves are in the Democratic Republic of Congo, which has a history of extreme instability, is a key risk to supply. "Going forward, the cobalt market could be further squeezed by supply disruptions, such as rising cost, declining ore grades, potential labour strikes, a lack of infrastructure support and political unrest in the DRC," the report said. GLENCORE ALLIANCE Credit Suisse can access a ready source of the metal thanks to its alliance with Glencore. Through its shareholding in mining firm Xstrata and deals with other producers, this Swiss-based commodities trader has sales rights to a large chunk of the world's cobalt. "The challenge for new commodity products is creating and maintaining liquidity. Through our trading alliance with Glencore, Credit Suisse is the only bank that is able to consistently source such liquidity in many of these markets," Naqvi said. "We have plans to further extend the list of tradable commodity products going forward." Among other commodities traded by Glencore are coal, and steelmaking additive vanadium, which along with cobalt is one of a group of substances collectively known as "minor metals". Credit Suisse's move into cobalt comes at a time when several commodities trading firms are trying to break into minor metals, attracted by an outlook of rising demand and higher prices. The global trend towards greater use of high-tech products such as laptop computers, flat screen televisions and catalytic converters, all of which contain minor metals, will raise the cost of these metals, merchants believe. -END- | |
| September 05, 2007 Thousands Flee Homes Amidst Renewed Violence in DRC Publisher: diamonds.net News Author: Avi Krawitz | |
| RAPAPORT... Thousands have fled their homes in the Democratic Republic of the Congo's (DRC) eastern province of North Kivu, in the wake of renewed fighting between government troops, renegade troops, and rebel groups, a UN spokesman reported at a September 4, 2007 press briefing in Geneva. The clashes have raised concerns the mineral-rich nation may fall back into civil war, which plagued the country during the 1990s leaving an estimated 4 million people dead. In 2006, the DRC produced 28.99 million carats of diamonds, accounting for 16 percent of the global total. "We fear that the pursuit of a military solution to the problems in North Kivu would further worsen the province's humanitarian crisis through the potential displacement of hundreds of thousands of additional Congolese civilians," said Ron Redmond, spokesman for the UN High Commissioner for Refugees (UNHCR.) Following clashes between supporters of General Nkunda and regular FARDC forces (the DRC's national armed forces) the UN peacekeeping mission in the country, MONUC, sent in 200 reinforcement troops to the area and stepped up diplomatic pressures in a bid to restore calm. Redmond reported that while many of the internally displaced persons (IDP) had not witnessed direct fighting, they left their homes fearing the ongoing military buildup in the area. "Some of the IDPs have reported cases of rape and killings of civilians by armed men," he added. At a press briefing earlier in the week, UNHCR spokesperson Jennifer Pagonis warned that "with heightened tensions and the build-up of military forces, the situation risks turning into a humanitarian and human rights disaster." More than 20 makeshift camps for internally displaced persons have emerged in North Kivu since December as the capacity of local host families to absorb the new arrivals has been overwhelmed, UNHCR reported. UNHCR is considering the possibility of setting up a new displacement site near Mugunga, which currently hosts as many as 18,000 displaced people. UN Secretary-General, Ban Ki Moon, expressed his concern over the clashes calling on "the government of the DRC and all local stakeholders to persevere in their efforts to bring about a peaceful solution." The Secretary-General is also very concerned by the impact of the fighting on local populations and calls on all parties to ensure the protection of the vulnerable. | |
| September 05, 2007 United Nations Concerned Violent Outbreaks in DRC Could Signal War Publisher: diamondintelligence.com Author: Staff Writer | |
| The United Nations has responded to increased tensions in the Democratic Republic of the Congo (DRC) by sending troops and stepping up diplomatic pressure on each of the opposing factions. Violent outbreaks in the country's eastern region have forced thousands from their homes as they attempt to flee the fighting. The worst of the clashes have so far occurred in the town of Katale in the Masisi district of North Kivu province, according to UN News Service. In response, the UN has sent 200 reinforcement troops from MONUC, the UN mission in DRC. Former Gen. Laurent Nkunda and his forces are clashing with government over what he believes are measures to protect his own minority ethnic Tutsi population in North and South Kivu provinces from local Rwandan Hutu fighters. Nkunda is reportedly clashing with the government in retaliation against the Kinshasa government's alleged support for Hutu fighters. The eastern region of Congo is no stranger to conflict: between 1998 to 2002 the area was ravaged by fighting between local militias, renegade soldiers and the army until a peace agreement was signed between the rebel factions that had been holding nominal control. The UN reported that more than 650,000 people are now internally displaced in the North Kivu area. Tens of thousands have also fled to the neighboring Uganda. The Democratic Republic of Congo is one of the world's largest diamond-producing countries by volume (in carats). In 2006, the DRC contributed 17 percent out of the total 175,538,127 produced globally. -END- | |
| September 05, 2007 Mystery disease ravages DRC Publisher: afrol News Author: Staff Writer | |
| afrol News, 5 September - A reported outbreak of a mysterious disease has killed more than 60 people in the Democratic Republic of Congo (DRC), health officials confirmed. All those people, including health workers who had contact with the deaths had also succumbed to the disease. The origin of the disease with high mortality rate is yet to be established. It has been reported in the Kasai-Occidental. Its outbreak followed the high number of deaths among pigs and chickens in the area's rural villages three months back. Congolese health authorities could not tell the exact number of the cases or its death toll. But majority of the cases cause fever, headache, diarrhoea or colicky abdominal pain, and vomiting. More than 50% of the children under 10 years have been affected by the outbreak. Health experts in Congo who team up with their colleagues from World Health Organisation (WHO) have been investigating the outbreak in the reported areas where they have taken clinical samples for laboratory testing. Besides, the world health body is mobilising support for epidemiological investigation and logistics. Measures to improve hygiene, safe water supply, safe burial practices and effective infection control have since been under way. The lack of masks for hospital workers has exposed them to the disease. A local nurse who was taking care of infected patients in a local hospital died of the mysterious outbreak. Some experts linked the outbreak to hemorrhagic fever which might have been transmitted during the process of washing death bodies and funerals because many people, including a local chief, who attended a recent funeral died from fever and dehydration. However, medical experts warned that they are still investigating the disease. As such, it will be too early to connect the new outbreak to hemorrhagic fever. -End- | |
| August 31, 2007 Congolese government deals blow to Katanga's hostile suitor Publisher: Mining Reporter Author: Andy Hoffman | |
| A hostile takeover offer for Katanga Mining Ltd. was thrown into disarray just a day after it was launched when the bidder was stripped of a key mining licence in the Democratic Republic of Congo (DRC), sending the company's shares into a tailspin. The public prosecutor for the DRC said it is revoking and cancelling Central African Mining & Exploration Co.'s (CAMEC) mining licence for an area known as C19 because of "serious irregularities" in the original issuing process. "The central conclusion is that there was not a valid contract in the first place. It did not go through the expected process for completing a valid contract," Roger Carroll, a spokesman for the DRC government, said in an interview. CAMEC, which formally tabled an all-stock bid for Katanga on Wednesday, saw its shares plunge nearly 17 per cent in London yesterday to 39.75 pence, further reducing the value of its all-stock offer to roughly $14.40 (Canadian) per Katanga share compared with Katanga's closing price of $19.80 on the Toronto Stock Exchange. At one point in the trading session CAMEC shares were down as much as 39 per cent. Katanga, which is developing the massive Kamoto copper and cobalt complex in the DRC, has been working feverishly to fend off the CAMEC bid. It has undertaken an auction process that has attracted several interested parties who have signed confidentiality agreements giving them access to financial data. Nikanor PLC and Anglo-American PLC are understood to be among the possible bidders. However, the devastating development for CAMEC could cool the potential suitors' interest in tabling a white knight offer for Katanga, industry sources said, or at least slow down the proceedings. One source close to the process said CAMEC's loss of its mining licence was a "double edged sword" that could scare off rival bids. At the very least, Katanga's need to quickly find an alternative to the CAMEC bid has diminished. "Clearly, the urgency wanes a bit," the source said. George Topping, an analyst at Blackmont Capital in Toronto, said even without the CAMEC offer, Katanga is likely to attract other bidders, but only those willing to take on the risk of mining in the DRC, which is still struggling to achieve political stability. "This is a highly desirable asset, it's a pity it's in the Congo," Mr. Topping said. The DRC has seen a rush of foreign mining firms flock to the mineral rich country following the end of a devastating civil war in 2004 and democratic elections in November. It is reviewing about 70 mining licences (including Katanga's), many of which were granted during the conflict or in its chaotic aftermath. CAMEC's review was accelerated because of the Katanga bid, which some government officials opposed. "Because there was a civil war going on, some of the people who purported to sign for the [government] had no authority to do so. Others might have had the authority but didn't have the expertise needed at hand. If you've got rockets firing at you there aren't many lawyers sitting around and pouring over the documents," Mr. Carroll said. CAMEC executives were unavailable for comment, but in a statement the company said they believe there is no basis for the permit revocation. "There is no legal basis for the removal of any of our licences in the DRC. This is clearly an attempt to destabilize CAMEC's share price in relation to our offer for Katanga," stated Andrew Groves, CAMEC's chief executive officer. The DRC holds roughly one-third of the world's cobalt reserves and 10 per cent of its copper reserves. Firms such as Freeport-McMoRan Copper & Gold Inc. and its Canadian partner Lundin Mining Corp.,, as well as TSX-listed Anvil Mining Corp., are facing reviews of their mining licences. Despite its metal resources, the average citizen's income is less than a dollar a day. Government revenues for mining totalled just $32-million (U.S.) last year, Mr. Carroll said. Katanga Mining Ltd. Close: $19.80, down 73¢ -END- | |
| August 30, 2007 Cobalt: Lithium-Based and Nickel-Based Rechargeable Batteries Publisher: ResourceInvestor.com Author: Jack Lifton | |
| DETROIT (ResourceInvestor.com) -- Natural resource investors should pay close attention to a story in today's Toronto Star, which certainly got the attention of the purchasing departments at all of America's - and Japan's - OEM automobile manufacturers, as well as at the myriad of mostly small companies working on the development and/or production of both lithium-ion battery technology for future use and of the nickel metal hydride batteries used currently in vehicular power trains. Last week I wrote about the fact that the world's largest producer of lithium and of lithium-based chemicals had convinced me that there is not now and will not be a lithium shortage even if hybrid (HEV), plug-in hybrid (PHEV) and all-electric vehicle (EV) production should ramp up to meet the most optimistic projections during the next 5 to 10 years and all use some derivative form of today's lithium-ion technology based battery for propulsion purposes. But there is another metal, which at the moment is a critical material, one without which the current designs of lithium-ion technology batteries cannot be built: cobalt. I'll explain why this is so in another moment. As it happens cobalt is also critical in the current technology for manufacturing nickel metal hydride batteries, which are as universally used today as they have been since 1999 in all production hybrid-powered vehicles made by Toyota, GM and the other large OEM auto makers. Control of nearly half of the world's cobalt production and almost exactly half of the world's known cobalt reserves is part of the reason and part of the risk being taken by Central African Mining & Exploration Co. [AIM:CFM], which is making an unsolicited bid for Toronto Stock Exchange-listed Katanga Mining Ltd. [TSX: KAT]. Katanga, like CAMEC, operates in the Democratic Republic of Congo (DRC). If the takeover is successful, then CAMEC's DRC operations will produce 60% of the company's cobalt and the DRC operations of Katanga Mining will produce 60% of the copper for the combined company. The critical issue will be where such refined metals will be produced, since up until now it has been common to ship concentrates of copper and cobalt to customers in countries where smelting operations have less than critical friendly local regulators. The final destination for most Katangese ores of copper and cobalt has been up until now the People's Republic of China. The OM Group [NYSE:OMG] is today the world's largest producer of cobalt chemicals sourced primarily from its mines and ore refining operations in the DRC; OMG manufactures, outside of the DRC, a range of cobalt and cobalt containing chemicals for manufacturing rechargeable batteries, and although it has just completed selling off its global nickel operations to Russia's Norilsk, OM still makes nickel/cobalt engineered materials for use in alkaline nickel, nickel cadmium and nickel metal hydride battery production. Note well that this last battery type, nickel metal hydride, is today universally used in all hybrid vehicle production by the world's major mass production OEM automobile makers such as Toyota and GM. A brief note about cobalt's occurrence and forms in nature can be found here. Western investors might think that any country with either of the words "Democratic" or People's" in its official UN-registered name would be anything but democratic or oriented for the good of its common people. Further, one would think, such countries would have an affinity for one another. North Korea and China, for example, readily come to mind, so why not the DRC and China? Occasionally even nations with names such as the Democratic Republic of the Congo will come under the control of rulers - I mean, of course, democratically elected officials, with the interests of their people at heart. I wrote on RI earlier this year about one such man, the governor of the DRC's Katanga Province, one of the world's true natural resource treasure houses. This gentleman, educated in the UK, realised that his province, Katanga, and his country, the Democratic Republic of Congo, could never develop economically if it remained simply a mine from which the country's most valuable current assets were removed by unskilled labourers - his people - and moved to other countries where skilled labourers, engineers and scientists could make use of them. He therefore changed the rules. First, he had legislation enacted requiring that a high tax be placed on raw materials for export with a progressive lowering of the tax as the material was upgraded before shipping. The copper mining companies, which are also the cobalt producers, reacted by immediately undertaking the construction of smelters using best practices and best available technology to reduce or eliminate pollution. In addition, the mining companies agreed to educate both on the job and overseas a generation of local Katangese mining and manufacturing engineers. The result has been first the growth and now the consolidation of the copper and cobalt industries in the DRC. Why are copper, nickel and cobalt tied together? Because cobalt, although sometimes found by itself, is predominantly produced as a byproduct of copper and or nickel mining. Today, with cobalt uses growing and therefore demand higher than ever before, while at the same time copper and nickel demand and price have soared in the current supercycle, a cobalt buyer can be fooled into thinking that the more cobalt he buys, the cheaper it will get but that in any case if he is willing to pay enough he can always get cobalt. This, as CAMEC, Katanga and OM know well, is the logical fallacy of reasoning by false analogy. The reasoning would only be correct if all of the world's cobalt were produced as a primary product and if there were no technical limits to its production other than declining ore grades. The U.S., which did not mine or refine cobalt in 2006, nonetheless used an amount of cobalt equal to 20% of all of the cobalt produced in the world that year. Most of the cobalt the U.S. used in 2006 was imported from just three countries: Norway, Russia and Finland. It is likely that most of that material originated in Africa, primarily in the DRC, and was refined in those three countries, although the Russian material was most likely mined and refined in Russia by Norilsk as a byproduct of its nickel operations. CAMEC (and to be fair OM) see the handwriting on the wall; they and Katanga Mining are either now or will shortly be refining in the DRC all of their ores produced in the DRC. This will give effective control of half of the world's cobalt not just to them but to a combination - which cannot be ignored - of those companies and the government of the DRC. U.S. anti-monopoly and price fixing laws do not have any force within the DRC. However, greed, self interest, economic independence and resource nationalism are concepts that are alive and kicking in the DRC. A world economic recession which slows down the demand for copper and nickel will severely impact cobalt production, so I believe that the companies mentioned in this article may well be hurrying to produce cobalt, ship it to warehouses and stockpile it while the global copper and nickel markets allow them to do so with this valuable byproduct. So now what has this got to do with lithium-ion batteries, nickel metal hydride batteries and HEVs, PHEVs and EVs? First, the USGS states that in 2006, "nearly one-half of the cobalt consumed in the U.S. was for use by super alloys, which are used mainly in aircraft gas turbine engines; 9% was in use in cemented carbides for cutting and wear resistant applications; 18% for various other metallic applications; and 24%, for a variety of chemical operations." What the USGS did not say was that lithium-ion rechargeable batteries, which are made today using cobalt, were made in the US in just tiny experimental quantities in 2006 and that no cobalt containing cathode material for nickel metal hydride rechargeable batteries was made in the U.S. in 2006! Second, the USGS also said in 2006 that "in most applications, substitution of cobalt (by another metal) would result in a loss of product performance." Third, the best technology so far for manufacturing lithium-ion technology based rechargeable batteries for vehicular power trains is based on lithium-cobalt oxide as an electrode material. This technology, however, has been implicated in overheating and even occasional explosive behaviour by batteries using such technology. An excellent, brief, not too technical survey of lithium-ion battery technology issues including the present position of cobalt utilization in lithium-ion batteries can be found here. There are other non-cobalt lithium-ion technologies known and being touted by public relations announcements of laboratory successes, but even so, as the USGS 2006 Cobalt Survey states, and I repeat, "in most applications, substitution of cobalt would result in a loss of product performance." This has so far turned out to be true for not only lithium-ion battery technology but also - critically so - for nickel metal hydride battery technology. American OEM automotive industry believes that the safety and reliability issues with the present lithium-ion/cobalt rechargeable battery technology may be solved in the near term. It is therefore interested in the global cobalt market. Also there is a real probability that nickel metal hydride rechargeable batteries may continue to be used indefinitely as all or part of the battery system for HEVs, PHEVs and EVs. Arrogant individuals in western financial centres like to emphasize their lack of a moral compass - or a need for one - by saying that to them, the Golden Rule is: "Them that's got the gold makes the rules." The gentlemen who own and operate CAMEC, Katanga and OM, along with those who rule the DRC, might counter by saying: "Only them that's got the cobalt determines where and if rechargeable batteries for vehicular power trains are made." I am wondering where CAMEC has come up with a starting offer of $1.4 billion for Katanga. For a private equity fund that amount of money would be trivial, even in the current financial climate. Yet, if a fund were to agree to take physical cobalt future deliveries as a guarantee for its proffered funding, it might have made a brilliant deal, which could be the model for many such deals in the future. It seems to me that corporations that critically need cobalt might be willing to buy a share of such a promise from a private equity fund even today. Gee, if the private equity fund sold enough of those promises, beforehand it would have made either a no-cost or an immediately profitable deal before the first dollar changed hands. China produces very little cobalt; Japan and Korea produce none. Yet the three of them use together twice as much cobalt as the U.S. Not only that, but China was getting most of the cobalt ore from the DRC for smelting and refining. Now that will be done in the DRC, but China still needs material, more so now than ever. How much does China have in that sovereign fund? Isn't Japan now openly stockpiling strategic metals? Interesting questions, aren't they? -END- | |
| August 28, 2007 BHP sales could mark turnaround for cobalt Publisher: SFP Metals Author: Martin O'Neill | |
| London 28 August 2007 12:18, BHP Billiton has booked cobalt sales amounting to more than 40 tonnes at prices as high as $25.60 per lb, marking what some observers think could be a turning point for the blue metal. Cobalt prices had slid through the summer to their seven-month lows but BHP's sale last week as low as $24.20 could represent the bottom of the market, they said. Enquiries increased substantially last week after BHP announced its cheapest sale since January 22, and the sales booked on Monday could represent a welcome return of optimism. "The bottom of the market is here," a trader who bought two of the lots BHP sold on Monday told MB. "Cobalt's on the return." BHP has sold to a number of parties --- at $24.50, $24.70, $25 and $25.60 --- and is now offering at $26.50. "It's a high-grade push at the moment," said the trader, adding focus will soon shift to the low-grade market. Norilsk Nickel booked 15 tonnes at an average of $23.61 per lb last week, but is likely to achieve higher prices this week, he said. "As of yesterday they were still offering at $24 and if we don't take them out, someone else will," he said. The flurry of activity coincides with a tender by superalloys producer Cannon Muskegon for more than 100 tonnes of cobalt for delivery next year. Other consumers are also in the market for fixed price deals for 2008 as the summer doldrums draw to a close. Traders could be buying metal from BHP to cover future demand and are likely to be betting prices will continue to rise, another dealer said. "This could be the match" that ignites the market, he said. -END- | |
| August 15, 2007 Tale of Two Cobalts Publisher: Metal-Pages | |
| LONDON (Metal-Pages) 15-Aug-07. The cobalt market may have taken a break over the summer holiday period in the northern hempishere, but forces remain at work below the surface tugging the largely balanced market in two directions. The bears maintain the high grade market is around $25.30-25.80/lb, maybe "even be 10 cents lower", with low grade about $23.60-24.40. Interestingly, the bulls agree with the high grade quote at $25.30 to 25.80, but put 99.3 substantially higher at $25.20 to 25.50, and Indian/CTT $24.50-24.80/lb. One processor source reported purchases of 99.3% below $24 (ranging from $23.60-23.95), from two producers and one trader. On top of this, said the source: "It appears that a 20 tonne tender went at $23.45 and was well subscribed. We did join in at $23.90 but were way out." One bullish trader, meanwhile, had this to say: "Currently the summer holidays have clouded the fundamentals - but in the next few weeks as customers return from vacation - they will need to obtain metal to fill their glowing furnaces. The next chapter in cobalt is going to be very interesting. I don't think the fundamentals have ever been this strong before. "It is estimated that by the end of this year the shortage will be between 3,000 to 4,000 tonnes. The shortage for 2008 doesn't look much better and I estimate it at 3,000 to 8,000 tonnes, depending on whether Kantaga and Formation [Capital's ICP] come on stream. But these grades have an unknown specification until they come into production." He added that the lowest grade material is now Indian and CTT (Moroccan) which is now trading at a dollar discount to Russian. "Because of their high tramp element they are not allowed anywhere near the booming Aerospace Sector," said the source. As far as current production is concerned, conflicting statistics were released this week. Cobalt production at Xstrata's Nikkelverk refinery (previously owned by Falconbridge) was impacted by reduced supply of cobalt-containing custom feed materials. Cobalt production fell to 1,920 tonnes from 2,530 tonnes in the first half of 2006. However, Zambian copper and cobalt producer, Luanshya Copper Mines recorded a 59% rise in cobalt production to 707 tonnes in the quarter ended June 30,2007, up from 444 tonnes produced in the previous quarter of the year, ceo Derek Webbstock said on August 14. The increase was due to the return to normal production after wage related strikes and a furnace rebuild,which affected production in the first quarter. He described the performance as one of the best since the mine restarted production in 2004. LCM's cobalt production comes from Baluba mine in Luanshya and the company's 20 million tonne Nkana slug dumps in Kitwe through Chambishi Metals' furnace. Baluba mine produced 80-100 tonnes/month, while Chambishi produced about 70%, or around 200 tonnes/month of the company's cobalt production. As the summer draws to a close, it will be revealing to see just whether cobalt hungry consumers come in to feed their furnaces to the brim, or continue to play the waiting game. -END- | |
| July 03, 2007 Idaho Cobalt Project planners say most comments favorable Publisher: Idaho Business Review Author: Idaho Business News Section | |
The company that proposed the Idaho Cobalt Project mining venture near Salmon today said most official public comments to the U.S. Forest Service have been favorable. Canada-based Formation Capital Corp. said in a statement that the Forest Service received 175 official comments. Among them, 160 expressed support for the mine, nine expressed opposition and the rest provided information without indicating an opinion, according to the company. Formation has spent more than eight years on the permitting process. Of the 160 supporters, 90 specifically endorsed Formation's plan, five backed other mining alternatives that the Forest Service presented, and the rest did not specify preference of one mining plan over another, the company said. Bill Scales, president of Formation Capital U.S., said several comments included solid recommendations to improve the company's plans. The Forest Service expects to publish a final Environmental Impact Statement by mid-October in the Federal Register and concurrently issue a Record of Decision, pending the outcome of consultations with other federal environmental agencies, the company said. Afterward, the federal government will allow 45 days for appeals, and another 45 days for resolution of appeals. -END- | |
| June 13, 2007 Boeing sees $2.8 trillion market for new planes Publisher: MarketWatch Author: Aude Lagorce | |
| LONDON (MarketWatch) -- Boeing Co. on Wednesday raised its 20-year forecast for global aircraft deliveries, citing strong demand in Asia and the rapid growth of low-cost airlines. The U.S. plane manufacturer said it sees demand for 28,600 new planes, representing sales of $2.8 trillion, over the next two decades, compared with the 27,200 it predicted last year. Passenger traffic is seen growing at about 5% a year. The bulk of the demand will be for single-aisle airplanes such as the 737, but the twin-aisle market, which includes the new 787 Dreamliner jet, will exceed it in dollar terms. "The single-aisle segment will continue to have the greatest demand in terms of units," said Randy Tinseth, Boeing's vice president of marketing for commercial airplanes. "This is partially driven by continued high growth in low-cost carriers." Boeing (BA: $98.47, +1.99, +2.1%) forecast deliveries of 17,650 new single-aisle aircraft, representing sales of $1.2 trillion, and of 6,290 twin-aisle aircraft, worth $1.3 trillion, over the next two decades. The regional jet market, which Boeing defines as planes with fewer than 90 seats, is seen at 3,700, representing only 4% of the global market in dollar terms. Boeing shares rose 1.7% in morning trading. The forecast comes just a few days before the opening of the Paris Air Show, the industry's most closely watched event, where Boeing and European rival Airbus will compete bitterly for orders. Airbus published its own forecast last November, calling for 22,700 new planes worth $2.6 trillion. Airbus is a unit of European aerospace and defense company EADS company. The main area of disagreement between the two manufacturers is in the larger aircraft segment, where Airbus sees demand for 1,263 new planes and Boeing for only 960 planes. "They are looking at the market a little differently," said Tinseth. The diverging forecasts reflect the manufacturers' strategies. While Boeing is betting that airlines are going to meet exploding travel demand with more direct, point-to-point service on midsize planes, Airbus believes that carriers will want larger jets such as the A380 to address an explosion in hub-to-hub traffic. The A380 carries 550 passengers in standard configuration. Boeing believes the average jet will be just 3% larger in 2026 than it is today. The two makers agree, however, that the Asia-Pacific region will drive the explosion in demand, generating 36% of aircraft sales in 2026, ahead of North America, with 26%. Tinseth also downplayed concerns over production snags on the 787, which is set to roll out of the assembly line on July 8. He admitted that the company is struggling with a shortage of fasteners but said the program is still on track. Aude Lagorce is a reporter for MarketWatch in London. -END- | |
| May 12, 2007 Formation on target for cobalt production at the end of 2008 Publisher: Metal-Pages.com | |
| SHANGHAI (Metal-Pages) 11-May-07. Canada's Formation Capital Corporation is on target to begin producing high purity, aerospace grade cobalt by the end of 2008, Scott Bending, Formation's President, told delegates at The Cobalt Conference in Shanghai. Formation is currently operating the Sunshine Precious Metal Refinery at Big Creek in Idaho, U.S.A., where they are producing copper sulphate and precious metals using a unique solvent extraction and electrowinning process. The facility is being expanded to produce LME high grade copper and high purity cobalt metal, with the option to produce high purity cobalt chemicals, giving them greater flexibility to meet market demands. Once in production Formation will be the only producer of primary cobalt in the U.S.A. The plant can currently produce over 10 million ounces of silver, 350,000 ounces of gold and 8 million pounds of copper per annum and will have the capacity to produce 1,625 tonnes of cobalt once the cobalt circuit is completed. The feed will come from a nearby underground mine [Idaho Cobalt Project] that has measured and indicated resources giving it a mine life of over ten years, with inferred resources suggesting an additional four years on top. In addition there are two further resources which Bending believes will ultimately be added to the total extending the mine life for several decades. Formation is well advanced on the permitting for the mine, which they expect to have in place by autumn this year along with a bankable feasibility study in June. With demand for cobalt expected to continue to increase and supplies predicted to remain tight over the next couple of years the projects timing looks good, especially as, according to Bending, the project will make money at $10/lb which, if the current prices of around $30/lb are sustained, should keep the shareholders happy. -END- | |
| May 11, 2007 Batteries to top cobalt demand by 2011 Publisher: Metal-Pages Author: Robert Baylis, Senior Analyst, Roskill Information Services | |
| SHANGHAI (Metal-Pages) 11-May-05. The trend for cobalt consumption remains positive with batteries set to overtake superalloys as the largest market for cobalt by 2011 Robert Baylis, senior analyst, of Roskill Information Services told delegates at The Cobalt Conference in Shanghai. Cobalt demand, currently estimated at 56,000 tonnes p.a. is expected to rise to 80-85,000 tonnes p.a., possibly higher. Strong demand for Li-ion batteries for mobile phones and portable computers is expected to sustain growth in cobalt demand for batteries at 12% p.a. out to 2011 when consumption will reach 18,000 tonnes p.a.. The growth rate, whilst strong, is lower than the 26% rate seen in this sector over the last few years but could rise again to 21% p.a., accounting for an additional 3,000 tonnes if demand for hybrid and electric vehicles takes off, however, substitution on both cost and safety grounds could be an issue, Baylis warned. Despite being overtaken by demand from the battery sector, demand for cobalt for superalloys is growing at 5% p.a. and is expected to reach 15.000 tonnes by 2011 driven by positive growth rates for air travel resulting in an increasing demand for aircraft along with improving demand for gas turbines. On the down side for cobalt consumption, high metal prices have resulted in greater recycling efficiencies and new designs for both gas turbines and aircraft engines have lead to increased longevity. Elsewhere, demand for cobalt for the production of catalysts is strong, particularly for the production of PET which is growing at 7% per annum, whilst hydroprocessing catalysts are growing at 5% per annum, like superalloys, though, high prices are resulting in greater levels of recycling and regeneration. Roskill forecast that consumption of cobalt for catalysts will grow at 5% p.a. and reach 8,500 tonnes by 2011. In addition catalysts for new gas to liquid projects could add a further 1,000 tonnes of consumption. Cobalt's use in hardmetals for cutting tools is likely to benefit from higher growth in the developing economies, which will offset a fall off in demand from developed countries and increased recycling levels. They forecast that demand for cobalt will grow at 3-4% p.a., reaching 7,000 tonnes by 2011. Demand for cobalt for the production of pigments and soaps is expected to increase in line with general economic trends at 4% p.a., reaching 11,000 tonnes by 2011. Offtake of cobalt for the production of magnets is, however, stagnating as continued substitution of rare earth elements takes its toll, meaning that there will be little or no growth from this sector over the next four years. -END- | |
| May 09, 2007 Cobalt prices could go off the scale over the next two years - CRU Publisher: Metal-Pages | |
| SHANGHAI (Metal-Pages) 9-May-07. Cobalt prices could go off the scale over the next couple of years as supply is squeezed in the short term Peter Searle, managing consultant of CRU Strategies told delegates at the Cobalt Development Institute Conference in Shanghai. With little new cobalt production forecast to come on stream until 2009, at the earliest, CRU believes that the supply of cobalt for 2007 and 2008 will be below the level of consumption which could result in a severe squeeze in availability. In such a scenario the market will be highly reliant on any stocks of cobalt that have been built up over recent years. According to Searle, their figures suggest that cobalt was in surplus over the past few years, suggesting that there should be stockpiles somewhere in the world, particularly in the DRC, which could be drawn out by higher prices. As a consequence the cobalt market is going to be highly reliant on the DRC over the next couple of years in order to balance demand. The availability of African material will be particularly critical for China, which according to figures from Li Xiaodong of Zhejiang Huayou Cobalt Nickel Materials relied on Africa for 94% of its imported cobalt concentrates (DRC 69%, Congo 17% and South Africa 8%), which in turn made up 69% of its overall cobalt supply. In addition as the price of concentrates from the DRC has risen it is becoming increasingly marginal for China to process concentrates and there may be a point reached where it becomes more economic for China to purchase metal units rather than concentrates. Chinese cobalt demand in 2007 is forecast by CRU to be around 15.500 tonnes, which if the DRC implements its policies to export more added value material means that China will have to reduce exports to negligible levels and draw down on internal stockpiles to satisfy domestic demand. From 2010 onwards Searle predicts that new cobalt and nickel projects will result in cobalt supply moving into a surplus, which will have a correspondingly negative effect on the cobalt price. In terms of how far the cobalt price could fall when the market moves into a surplus he calculates that increases in freight costs and the capital costs of new projects indicate that the long run marginal costs of cobalt production from 2010 will be around $14/lb. On the demand side cobalt is showing relatively modest growth with a forecast of 2.8% compound annual growth which will push annual cobalt consumption from a forecasted 60,000 tonnes in 2007 to nearly 90,000 tonnes by 2022. The demand will remain robust from rechargeable batteries, superalloys and polyester production but the current high prices raise concern about the future rates of growth and substation, something underlined by Ha-Young Lee of Korean battery producer Samsung who said that they were not considering cobalt in their development plans for batteries for new applications. Asked about the structural changes in the cobalt industry during the past year, which has seen Norilsk commit its cobalt production to US processor OMG Group, Searle said that he felt that this had benefited the shareholders on the supply side but was unsure about what benefit this would have for cobalt consumers. -END- | |
| April 27, 2007 Hedge funds target exotic metals Publisher: Reuters Author: Daniel Magnowski - Analysis | |
| TALLINN (Reuters) - Exotic metals such as cobalt, vanadium and molybdenum may be the next targets for investors in the world's overcrowded commodity markets, financiers and traders said this week. "There are a lot more people in the metals business, and people are looking for unexplored, unsaturated markets," said Daniel McConvey of New York based commodity trading adviser Rossport Investments, which invests in the so-called minor metals. Most of the multi-billion dollar investment in metals this decade has gone to copper, nickel and other key industrial commodities. But the amount of money poured into these metals has made it harder for fund managers to make a return, so they are looking at other materials, says Keith Dunleavy, trader at London firm Stratton Metals. He has sold cobalt to hedge funds, and he reckons they expect prices to rise well beyond their current 11-year highs above $30 per lb. "They started getting into cobalt at $22 and $24. We started badgering them to take profit at $28 but they are not interested," he said. "The funds do immaculate research, and they got the fundamentals of nickel correct," he said at a conference in Estonia hosted by the Minor Metals Trade Association. The major fundamental factor behind rising minor metals prices is their use in products from flat screen televisions to aircraft parts and car exhaust catalysts. "Lots of these metals are hi-tech, and with the explosion in hi-tech, minor metals are going to feel some of that explosion," Rossport's McConvey said. Cobalt in particular is expected to rise. Earlier this month, Credit Suisse said the metal could spike to $40 per lb as demand grows. More hedge funds are knocking on the door of trading firms to try to find a way to take a position in cobalt. Unlike copper and nickel, though, cobalt is not traded on an exchange. so the market can be opaque and accurate pricing data hard to find. "One of the perennial problems of minor metals for the larger funds is transparency, reportability and volume," Nick French, managing director of trading firm SFP Metals, said. "I know for a fact they'd love to have been in cobalt, and still would love to be, but they are struggling to see how to apply their funds to illiquid markets," he said. An alternative to buying the metal itself is to buy stock in a company that produces cobalt, said Marcus Edwards-Jones, managing director of brokerage Lloyd Edwards-Jones. "If you want to trade cobalt, the best thing is to buy a big chunk of Camec (CFM.L) shares," he said, referring to a London-listed company that, among other projects, mines cobalt in the Democratic Republic of Congo. The advantage of buying shares in a company that produces more than one metal is that should prices fall in one market, the negative impact on share price could be offset by a price rise for another commodity it produces, he said. A big difficulty for investors in minor metals is how to close down their position without unleashing a large amount of metal onto the market, which would cause prices to fall. "Getting out of a big block of vanadium without trashing the price does make it very difficult for all but the most adventurous investors," Edwards-Jones said. Investors hope the London Metal Exchange's suggestion that it could launch contracts for minor metals comes to fruition. "It would be nice to have," McConvey said. "You could probably hedge positions, which would allow funds and other investors to enter the market with more comfort and less risk, and increase the liquidity of these metals." -END- | |
| April 26, 2007 Rolls-Royce says no alternative to high-cost metals Publisher: Reuters | |
| TALLINN (Reuters) - Prices of aerospace metals nickel, cobalt and rhenium are at their highest for years, but engine makers have little choice but to carry on buying them, Rolls-Royce said on Thursday. These raw materials have special properties which mean they cannot easily be replaced in aircraft engines, though their cost has surged recently, Leon Grabowski, Sourcing Specialist at the firm said. "Once it is designed, tested, flown in, it's almost impossible to take it out," he said. He was not able to give a figure for the impact of higher raw materials costs on Rolls Royce's bottom line, but said the firm needed to be sure it had a stable supply of the metals it uses. "I'm more concerned with delivery than price," he said, referring particularly to scarce metals such as cobalt, rhenium and tantalum. Cobalt prices have doubled to around $30 per lb in the past year, while nickel hit an all-time high of over $50,000 per tonne this week. Nickel, which is mined by companies such as Xstrata , CVRD and Norilsk , makes up more than half of a new aircraft engine, Grabowski said. Rolls-Royce was trying to deal with price spikes and volatile metal markets by signing long-term contracts with producers either at a fixed price or a capped price, or by buying up metal to keep in stock for the future. "The challenge is to have a strategic relationship with more than a single supplier," he said. Grabowski was attending a specialty metals conference in Estonia. (c) Reuters 2007. | |
| April 13, 2007 Cobalt Price Forecast Raised 67% by Credit Suisse as Use Surges Publisher: Bloomberg Author: Alistair Holloway | |
| April 13 (Bloomberg) -- Credit Suisse Group raised its price forecast for cobalt, a metal produced as a byproduct of copper and nickel, by 67 percent because of rising demand for the metal in the aerospace and gas-to-liquid industries. Cobalt will average $25 a pound this year, compared with a previous forecast of $15, Switzerland's second-largest bank said in an April 12 report. Cobalt with 99.8 percent traded this week at $30.625, according to data from publisher Metal Bulletin. Prices may rise to $40 by the end of 2007, Credit Suisse said. The metal is an ingredient in high-temperature alloys used in jet engines. Cobalt is also used in catalysts that help to turn gas into liquid fuel, and in rechargeable batteries. The bank said it expects ''new demand from emerging markets, such as China and India, where the launch of low-cost airlines in air travel and mobile phone usage are set to multiply among an expanding middle class.'' Cobalt stockpiles will fall and potential supplies for new projects may be delayed, London-based Credit Suisse analysts Eily Ong, Jeremy Gray, Hannah Kirby and Ephrem Ravi said in the report. Demand will exceed production through to the end of 2008, due to limited new production starting up, Credit Suisse said. -END- | |
| March 27, 2007 Norilsk moves up cobalt price Publisher: Metal-Pages Author: metal-pages.com | |
| LONDON (Metal-Pages) 27-Mar-07. Norilsk has moved its cobalt website price up 35 cents to $30.35, effective March 27. The Russian producer sold no cobalt last week on its website and observers in the trade believe the move today could reflect a major deal in the US yesterday. According to one informed source, a big US super-alloy maker finally came to the table for the balance of its 2007 needs at a fixed price on Monday. The BHP Billiton website has been quiet, with the company maintaining its offer price -- at $32.50. Its last sale was a five tonne business into Europe at $32.00 on 14 March. -END- | |
| March 23, 2007 Cobalt quiet, but tensions mount Publisher: Metal-Pages Author: metal-pages.com | |
| LONDON (Metal-Pages) 23-Mar-07. The cobalt market has been fairly quiet this week, with values unchanged at around $30-31.50/lb for 99.8% and $29.50-30.50 for Russian material. However, there is clear agitation below the surface as opposing sides position themselves for further movement. Although there are a number of relatively neutral observers, including producers who are happy to see higher prices, but are clearly not forcing the issue, bullish sections of the trade and more bearish elements of the consumer ranks, are poles apart. Despite largely agreeing with the range above, consumer sources told Metal-Pages today that they are concerned about manipulation and believe the market is not as undersupplied as others would lead us to believe. "We have metal to spare," they told M-P, "And we have tried to sell it back to suppliers and the trade, but are not getting the published numbers. In fact we've lost business. We also know that the recent special steel mill tender went below $28. It is true that this company can accept 99.2% material, but it is also true that it won't accept today's highest prices." A major European trade source, meanwhile, admitted that the outward appearance of the market is quiet but "in reality fundamentals, such as developments in the DRC are being left alone to get to work". He drew attention to a report on the African news service Mining Weekly Online that a permanent ban had been imposed on all raw ore leaving the mining-rich Katanga province of the Democratic Republic of Congo. (DRC). The newly elected Katanga governor Moise Katumbi told the site this week that a grace period of six months was being given to those exporting laboratory-certified concentrate from Katanga. Thereafter a ban would also be imposed on the export of concentrate and only refined metal would be allowed to leave the province. He had already put a stop to all raw ore leaving and that would continue for as long as he was governor. "I am not going to allow it. They have to make the metal here," he reiterated. "I'm not refusing metal exports, it's just the raw ore that is being stopped," he said. Laboratory-certified concentrate would still be allowed out for a period of six months, but from October that would also be stopped. Gecamines had a refinery, which was in bad shape, and required a $60-million investment to restore. By October, the new arrangement of miners with Gecamines had to be concluded, he told Mining Weekly Online. During the six-month period, the plant of the State-owned Gecamines would need to be rehabilitated to allow raw ore to be processed in the DRC itself. Attention has also been drawn to the booming superalloy sector and also a projected 4,500-5,000 tonne shortfall due to reduced supply and good demand reckoned to be at 65,000 tpy now. Both sides obviously have their reasons for wanting to either fan the flames or douse the fire, and can call upon relevant behind the scenes factors to strengthen their arguments. However, on the surface and on the websites little action has taken this week, with BHP-Billiton still quoting at $32.50, having made its last sale on 14 March -- a 5 tonne lot to Europe at $32/lb. The Norilsk Nickel has also been quiet this week, with the offer price standing at $30/lb since 16 March. Last week the site turned over a respectable 21 tonnes at an average price of $29.28/lb. Although no actual tonnages have been divulged, it would seem that little business has been transacted this week, particularly in Europe. Quiet times, but for how much longer? -END- | |
| March 14, 2007 Cobalt climbs steadily Publisher: Metal-Pages Author: metal-pages.com | |
| LONDON (Metal-Pages) 14-Mar-07. The cobalt market continues firm, with a few 5 tonne sales on the BHP Billiton site reflecting business at the higher levels. The company sold 5 tonnes of cobalt in Europe yesterday at $31.50/lb, its first sale since the end of February when it concluded 5 tonnes in Europe at $29.99/lb. The company sold a second 5 tonnes today, again to Europe, at $32/lb and moved up its quotation back up to $32.50/lb. Russian cobalt producer Norilsk is currently indicating $29.35/lb for material on its website. Generally, the market is indicated at $29-30/lb for 99.3% and $29.50-32.00/lb for 99.8%, although market participants still differ on both the highs and lows. One European trader, for example, says that although BHP sold at $32/lb today, he has been unable to sell Falconbridge grade material at $30.50/lb. "I'm not saying the market isn't firm," said the source, adding: "It's definitely not weak. But it's a strange market. And it's been quiet for me. I believe that certain forces are pushing the price up -- buying 5 tonnes here and there on the web to this effect." Consumer sources have also expressed concerns, that this could be the case, although they too can't deny that fundamentally things are firm for cobalt. Other more bullish trade sources have a more robust view of the market. "Demand is rampant," said one such trader, "I've had 700 emails in from people looking for demand -- particularly from US customers. All my long-term customers have been taking 50% more this year. With consumption at 65,000 tonnes now, we have a deficit of 4,500-5,000 tonnes. It really is a case now of finding units not price. Demand is off the wall." The trader claims to have sold above $31 in the US and could have asked for more. "There are reports that the DLA could be out of cobalt by the end of this year. There is no new cobalt supply out there and demand is rampant. I predict cobalt at $100 next year." According to the source cobalt at this price is small fry to the savings the aerospace industry will make in its new generation, fuel efficient aircrafts, like the airbus. However, cobalt chemical producers who serve the battery sector are quick to express concerns over substitution when the market is volatile, or price climbs too high and fast. At the moment cobalt is climbing steadily. But, undoubtedly, some turbulence can be expected in the months ahead. -END- | |
| February 27, 2007 BHP withdraws from Co sales Publisher: Metal-Pages.com | |
| LONDON (Metal-Pages) 27-Feb-07. Availability of cobalt has tightened further today, after BHP Billiton withdrew from sales of the metal on its website. "WMC are not currently posting Prices and Quantities," the firm says on http://cobalt.bhpbilliton.com/, with reference to its Australian subsidiary. "Please check again later." BHP's last sale was made today, of five tonnes to a European customer at a price of US$29.99/pound for delivery next month. Prior to that two sales were made yesterday to consumers in North America, at $28.25/pound and $29/pound respectively. The company previously pulled out of the market in November, a step which usually comes when prices are rising sharply, which does not seem to be the case at present, although levels continue on an upwards trend. The move comes with supply already squeezed following Russian major Norilsk Nickel's deal with American firm OM Group. Last week the firm failed to hold an auction of part of its existing cobalt stocks as had been forecast. Russian material is currently seen at $27-28/pound for cobalt 99.3% and $28.50-29.50/pound for high grade material, both edging up from levels seen last week. -END- | |
| February 16, 2007 Targeting a Tight Cobalt Market Publisher: ResourceInvestor.com Author: Richard Reinhard | |
| SEATTLE (ResourceInvestor.com) -- It isn't as hot as uranium or as precious as gold but cobalt's profile will continue to growing the coming months and years. The price has almost doubled from $16 - $30 per pound these past few months due to supply issues and steady buyers. The issue at hand for investors though, is that there are precious few public cobalt companies. It is becoming apparent that there is huge potential for companies positioned to provide a stable supply of cobalt. Demand is increasing into what is a very tight physical market, and there is real fear that current supply could be constricted. This is from a recent story from Metal-pages.com: "'It's just been non-stop,' said one London trader. 'This January is the busiest in 30 years.' He has paid $26.25 for Russian metal, predicting the shortage of stocks will send prices higher still. Consumers are so desperate for metal they are calling him at 11 in the evening, he said. He predicted cobalt prices will rise above $30 before the end of the month." The only cobalt-focused companies on my radar screen are Geovic Mining Corp [TSXv:GMC] developing its open pit cobalt-nickel deposits in Cameroon, Africa, and Formation Capital [TSXv:FCO], developing a cobalt deposit in Idaho. Cobalt inventories are low -- one source suggested only a few days' supply. Cobalt is used extensively in batteries for hybrid cars (both nickel and lithium ion) and many electronic devices -- cell phones, laptops etc., all of which are experiencing increasing sales. Inventories are low around the world, at a time when demand is picking up. Since 1993 cobalt prices were held down largely by sales from the U.S. Government stockpile, and lower grade cobalt material coming from the former Soviet Union. With these sources depleting, the market has little inventory to draw from, now relying primarily on new production. In late 2006 Russia-based Norilsk, already accounting for 20% of the world's nickel and cobalt production, announced the buyout of U.S.-based OM Group's (OMG) substantial nickel interests. OMG was the world's largest producer and manufacturer of cobalt products as a by-product of their nickel production. Now, Norilsk controls a much larger slice of the pie, and the market remembers their recent resolve to withhold supply in an effort to buoy cobalt prices. As part of their takeover agreement, Norilsk entered into a 5-year supply agreement with OMG to provide them with 6,500 million tonnes per year of cobalt in various grades, but there is uncertainty about how OMG will distribute these diminished supplies. The cobalt market is increasingly nervous that spot supplies will stall; when the Norilsk-OMA agreement was announced, market-savvy cobalt consumers immediately tried to increase stockpiles. Then BHP Billiton [NYSE:BHP] stopped selling cobalt. Though it only controls two per cent of the market, that move quickly strengthened an already tight physical market. The market's reaction to these events, coupled with already substantial and further expected increases in demand, drove the cobalt price from $16 to nearly $30 per pound during the last four months of 2006. Although there is no tertiary market for cobalt like the LME or COMEX, price transparency is provided by quotations through sources like Platt's Metal Week, Metal Bulletin and BHP Billiton's Cobalt Open Sales Systems. Additional cobalt information is also available from the US Geological Survey and the Cobalt Development Institute. Users obtain cobalt from traders, producers, government stockpiles and private inventories through negotiated agreements, bids and open market purchases. Cobalt Use Cobalt is an element that has many diverse applications: 
During the last three years, cobalt use in rechargeable batteries grew by 284%. Nickel metal hydride and lithium ion batteries all contain cobalt and are used in hybrid electric vehicles (HEV), electric vehicles, laptop computers, cell phones, portable tools and electronic devices. The fastest growing segment of battery applications is for HEVs since they reduce air pollution and fuel consumption by at least 50% compared to conventional vehicles. The HEV "plug-in" option, which includes an extra battery that may be charged from electrical outlets, would further decrease fuel consumption and be even more environmentally friendly while increasing cobalt demand. The Toyota Prius HEV was named 2004 Motor Trend Car of the Year and 2005 European Car of the Year. Toyota estimates sales of one million hybrid vehicles per year by 2012, and will offer all Toyota and Lexus models as hybrids. General Motors, Ford, Daimler-Chrysler, Mercedes and others are attempting to catch up with Toyota's hybrid success. China anticipates that a high percentage of its domestic car market will be HEVs and electric vehicles by 2030. Nearly all current HEVs use nickel-metal hydride batteries that contain about 22 pounds of nickel and 3 to 5 pounds of cobalt. Lithium-ion batteries containing 5 to 7 pounds of cobalt are expected to dominate future HEV markets because they charge in minutes rather than hours and offer many other economic and technical advantages. Cobalt Supply and Demand Demand Profile 
Source: Actual supply and demand by USGS and the Cobalt Development Institute. Cobalt consumption in 1995 was only 24,000 tonnes, but during the past 10 years has grown at an average rate of 12.9% per year, and continues to grow. Approximately 41% of the world's cobalt produced in 2005 was a by-product of nickel from sulfide and laterite deposits. An additional 53% was produced as a by-product of copper, mainly in the Democratic Republic of the Congo (DRC) and Zambia. The remaining 6% of cobalt production comes from small primary producers in Morocco and Uganda. Cobalt prices fluctuate significantly, partly in response to labour and political unrest as experienced recently in New Caledonia and historically in the DRC. The chart below suggests that the market will easily absorb increased cobalt production. The indicated supply deficits in 2007 and 2008 are a result of increasing demand and expected lag in production from projects proposed by other companies. 
Source: Actual supply and demand by USGS, the Cobalt Development Institute and other independent research groups. Summary In this new wireless and environmentally conscious age, cobalt demand is going to increase as supplies are tightening. We recently witnessed the small universe of publicly traded uranium producers / developers (4 of them) give investors phenomenal returns. Once the market becomes more educated about cobalt and industry analysts start talking about it, watch a flood of capital flow towards the very few publicly-traded primary cobalt companies available to investors. -END- | |
| February 08, 2007 Cobalt Rising Publisher: Metal-Pages | |
| LONDON (Metal-Pages) 08-Feb-07. The cobalt market continues to firm, although market participants were quick to stress that there is no drama or panic. However, there appears to be a growing expectation that the high grade price could hit $30 within the short-term. Prices are currently around $26-27/lb for high grade metal, with 99.6% at $25-26/lb and Russian at $24.60-25.60. The news this week that Norilsk has been given European Commission clearance to take over OMG Corp has helped to firm-up sentiment. ''The Commission concluded that the proposed transaction would not significantly modify the structure of the nickel industry,'' it said. The separate cobalt supply agreements include up to 2,500 tonnes a year of cobalt metal, up to 2,500 tonnes of crude cobalt hydroxide concentrate and up to 1,500 tonnes of crude cobalt sulphate and various nickel-based raw materials used in OM's electronic chemicals business. This material will obviously come off the spot market and expectations of this have bulled the market for several months. At the moment Norilsk continues to sell spot - selling 50 tonnes last week at an average price of $23.28. The company has subsequently raised its offer price to $24.60. Sources close to the company said that they still hadn't received any clear marketing indications for this year - but expect announcements to made through official channels. Asked whether volumes are at last week's levels, the sources said that many deals are still in the pipeline and that it is too early to say what the weekly volume will be. "The price is firmer, though," said the sources, adding: "Many people are talking of $30 now and in this market, who knows." A major consumer source agreed that the $30 tag was looking distinctly more viable. He told Metal-Pages: "Traders have been shouting about $30 for a while. Last week I wouldn't have agreed that it was possible. Now I'm not so sure. The market is definitely firmer, I can't deny that. In the short-term I expect the price to go up - but I just hope it won't go too high as it isn't good for our business." The source said that his company had some available metal for the spot market last week, but couldn't find a buyer several dollars below the BHP-Billiton web price. "We couldn't find a buyer that didn't want to advertise his purchase [on the web]," said the source. BHP-Billiton has gone on to sell two 5 tonne lots to Asia this week at its offer price of $26.50 - it has since increased its offer tag to $27.25. Elsewhere, there has been some speculation that Chambishi is buying to meet its contract commitments, after its recent technical problems. The Zambian government has asked Chambishi to shut its smelter for between 45 days and 60 days to allow repairs after an accident last month. The DLA gave details of buyers in January which included Phoennix, the US sales agents for Chambishi. "Is it possible this was an example of the buying in of 'approximately 100 tonnes' that Chambishi announced as part of its programme to replace the on-going losses from their furnace explosion?" pondered one European trader. A consumer agreed that this was a real possibility. However, he added that as far as he was aware Chambishi was meeting all its commitments - certainly the consumer reported that he was well-covered with contractual metal. So, although there is talk in some quarters that the cobalt price could even reach $50 lb - the 1978 record - there appears to be no immediate panic. But in a market as volatile as cobalt, it would be advisable to expect the unexpected in the coming weeks and months. -END- | |
| February 06, 2007 Jennings Capital Morning Comment on Cobalt Project DEIS Publisher: Jennings Capital Author: Ron Coll | |
| This is Not an Official Company News Release - For the Information of Shareholders & Interested Parties Only Dear Shareholder / Interested Party, Below please find Jennings Capital's February 05, 2007 Morning Comment Newsletter, reprinted here with their permission. The Newsletter comments on the Company's February 05, 2007 news release regarding the completion of the Draft EIS. Comments on financing requirements, mine construction time allotments and start-up times are Jennings Capital's estimates. A more comprehensive and detailed analysis of these items, along with project economics and other details, are expected before the end of March in the Company's NI-43-101 compliant Definitive Feasibility Study currently in progress and overseen by Samuel Engineering, Inc. of Denver, CO. ------------------------------------------------------------------------------- Jennings Capital Inc. Institutional Division 33 Yonge Street, Suite 320 Toronto, ON M5E 1G4 T: 416.214.0600 F: 416.214.0177 Toll Free: 1.877.214.3303 MORNING COMMENT February 5, 2007 Formation Capital Corp. (TSX-FCO C$0.56) Mkt Cap C$92 MM Analyst: Ron Coll Final Draft Environmental Impact Statement (EIS) Completed Formation Capital reports that the U.S. Department of Agriculture, Forest Services Branch (the "FSB") and other related state and federal agencies have completed the Draft Environmental Impact Statement (EIS) for the 100% owned Idaho Cobalt Project, central Idaho. The report will be printed and made available for public review and comment. Once formal notice is published in the Federal Register, the comment period begins, which can be no less than 45 days. We estimate the FSB will allow 60 days. The FSB will address all comments and proceed to the Final Environmental Impact Statement (the "FEIS"), which is anticipated in Q3/2007. The completion of the FEIS would be followed immediately by a Record of Decision that approves the Idaho Cobalt Project Mine Plan. The above outlined schedule now paves the way for this high grade Cobalt project to advance to project financing (estimated to be in the US$80million to US$90 million area) in Q4/2007 and, allowing a 15-month construction window, start-up at 3.5 million lbs of cobalt metal/year commencing in Q1/2009. With cobalt trading in the US$25.00/lb area and projected cash costs in the US$8.00 to US$10.00/lb area, the project economics are extremely robust. In the interim, Formation's 100% owned precious metals refinery (located at the Big Creek Hydrometallurgical Facility in Northern Idaho) continues to build incremental business. At capacity (10.0 million ounces of silver and 350,000 ounces of gold/year), the refinery is expected to generate approximately US$1.0 million of free cash flow per year. The much anticipated Feasibility Study for its 100% owned Idaho Cobalt Project is now expected to be released during Q2/2007. Measured and Indicated Resources (43-101 compliant) stand at 2.65 million tons averaging 0.628% cobalt, 0.619% copper and 0.016 ounces gold/ton for a contained 33 million lbs of cobalt, 33 million lbs of copper and 42,000 ounces of gold, sufficient for nine years of mine life at planned production rates. In addition to the M & I Resource, an Inferred Resources totals 1.12 million tons averaging 0.58% Co, 0.79% Cu, and 0.017ounces of gold/ton. With the conversion of only 50% of the inferred resource to M & I, the planned mine life would improve to 11 years. At January 31, 2007, following the cash sale of a surplus tailings storage facility to Sterling Silver Corp., Formation had cash and metal in inventory of C$6.5 million and no debt. Formation Capital remains one of our Focus Stock Picks for 2007. ------------------------------------------------------------------------------- Jennings Capital research is available on Bloomberg, Reuters, Thomson Financial and at www.jenningscapital.com This publication is a general market commentary and does not constitute a research report. Any reference to a research report or a recommendation is not intended to represent the whole report and is not itself a research report or recommendation. This commentary is for informational purposes only and does not contain investment advice. This publication is not to be relied upon as investment advice. Disclaimer - The information contained in this communication, and any attachments thereto, was obtained or derived from sources we believe to be reliable. We do not represent that such information is accurate or complete and it should not be relied on as such. Any opinions expressed herein reflect our judgment at this date and are subject to change. Jennings Capital Inc. and/or its employees and/or its associates may from time to time hold shares, options or warrants in any company mentioned in this communication, and any attachments thereto, and may buy or sell such securities. This communication is not to be construed as an offer to sell or solicitation to buy any securities. Jennings Capital Inc. is a member of the Investment Dealers Association and Canadian Investor Protection Fund. | |
| January 25, 2007 Cobalt rallies on Chambishi blast Publisher: Metal-Pages | |
| LONDON (Metal-Pages) 25-Jan-07. The cobalt market has got the wind behind its sails, getting a New Year boost from the explosion at Chambishi Metals in Zambia, which has helped push high grade up to around $25-26/lb, Russian to $22.50-24/lb and Zambian to $24-25/lb. The Zambian cobalt producer may need several weeks to repair its damaged furnace after an explosion ripped through its Kitwe plant on Sunday. Chambishi, which had already been restricting cobalt supplies to customers, said the blast-hit furnace may cost it 150 tonnes a month of cobalt. Sunday's news triggered a flurry of buying activity on the market, with BHP Billiton posting several sales on its website amid talk of a rally in prices as consumers and dealers seek to cover. Traders and producer sources reported increased enquiries, with one trader claiming to have sold 300 tonnes of metal this week, to destinations all over the world. "The only way is up for cobalt," he told Metal-Pages, "People will think $30 looks cheap next month. There is no new cobalt or nickel refineries coming on stream until 2009 and yet demand is booming, with the superalloys industry doubling output on the back of all the new aerospace business." New civilian and military aeroplanes are slated for production, with, arguably, the most high profile the BAE deal to supply 72 Eurofighter Typhoon jets to Saudi Arabia. With demand obviously going great guns, the issue of adequate supply is under the spotlight - particularly with the Norilsk-OMG offtake contract expected to be signed sometime soon. That said, sources close to Norilsk said they expected to be supplying cobalt to the spot market throughout the first quarter and, quite possibly, beyond. They told Metal-Pages today: "There have been no clear instructions for Moscow, so we don't have the figures available. However, it is expected that there will be enough to cover enquiries." One bullish trader dismissed this claim, saying that Norilsk would be sold out by the end of February and that the OMG deal would be signed on February 1. At the moment, however, Norilsk continues to sell on the spot market and moved its offer price up to $22/lb today. An executive at the company reported increased enquiries and said the company "had sold a bit to Asia, Europe and the US". The company sold 10 tonnes last week at an average price of $20.70/lb, so it will be interesting to see how much more is sold this week, when the company discloses the figures on its website next week. BHP-Billiton, meanwhile, has just hiked its offer price to $25.50, having sold a substantial amount of metal this week at prices ranging $24.20-25.00 due to the Chambishi news. -END- | |
| January 11, 2007 Cobalt Creeps Into 2007 Publisher: Metal Pages (www.metal-pages.com) | |
| LONDON (Metal-Pages) 11-Jan-07. Cobalt consumers are playing a canny game and many are still sitting on the fence 11 days into the New Year. Although opinions are divided over just how active the current market is, lack of buying on the BHP-Billiton and Norilsk Nickel sites, coupled with reports of low spot activity, are creating an uneasy calm. "You may say it is quiet," said one bullish trader, "But that's just the screens. I've seen 300 tonnes of business land on my desk - from Austria and the UK to the US and Taiwan. All my customers' sectors are seeing growth of around 15% pa - they're all maxing their contracts. The furnaces are glowing. At the moment the market is between $20-30/lb - but I expect it to burst out of this range when OMG signs its offtake agreement with Norilsk." The trader said demand could reach anything between 65,000-70,000 tonnes this year, leading to a 8,000 tonne shortfall. "Customers are sitting on one day inventories - they're living on vapour," he added. Others agreed that customers are still playing a waiting game, hoping the price will fall further before coming into the stock market. Said one major cobalt processor: "Some of the consumers have been very clever - buying when the price was low in November and still living off those stocks. Others are living hand-to-mouth, hoping the price will dip a little more. It has been quiet in the spot market. However, the fundamentals remain the same - strong." The source said his company had negotiated around two thirds of its 2007 requirements on long-term formula based contracts. The outstanding amount is made up of quarterly purchases and spot. "If we have a very good period, then we will come into the spot market to buy," said the source. "But if we buy at $20, we'll sell our product based on that price." At the moment $20 is a little below the current range, with Norilsk offering out at $22 and BHP-Billiton at $25.50, despite little to no business being transacted recently. -END- | |
| December 06, 2006 Cobalt stabilizes Publisher: Metal Pages | |
| LONDON (Metal-Pages) 06-Dec-06. The cobalt market has stabilized, with producer and trade sources reporting less active spot business. This is reflected in the cobalt websites of both BHP-Billiton and Norilsk Nickel, which have reduced their offer prices and reported less business. The Russian producer is now offering at $23.50/lb, down from $24, and BHP-Billiton has moved its offer price down to $30, from $33. Norilsk reported just 15.5 tonnes of business last week at an average price of $24.03/lb, down from 94 tonnes the previous week and 77 the week before that when the market started to rally. BHP-Billiton, meanwhile, hasn't reported a website business since 29 November, when it made a small 5 tonne sale into Europe at $30. Western producer sources expressed sceptism at the time that BHP-Billiton would be able to achieve $33 and even the more bullish of traders now acknowledges that the price was stretching it. Said one major western trader: "BHP-Billiton over-stretched the mark with $33 - hence the reason it has clawed the offer price back. We now expect the price to stabilize at around $28-30/lb for high grade and $26-27/lb for Russian, with Zambian slightly higher." What is apparent is the narrowing of the spread between Russian and high grade. The former has been supported by buying in the US last week and, of course, the news thatOMG will be taking most of the material next year. A source close to Norilsk confirmed that the market was quieter this week and said that attention had turned towards the company's other commodities. This is undoubtedly a sign of things to come, as Moscow takes over cobalt's marketing reins, driving the bulk of it to OMG. With the spot market quiet, attention has turned to long term contracts, with western trade sources reporting healthy premiums on the 99.3% and 99.8% published prices for next year. Attention has also turned to speculation concerning the marketing arrangements for Xstrata cobalt. A decision over whether Glencore or the former Falconbridge team will market the metal, was said to be imminent as Metal-Pages went live. Looking at the market for next year, observers said they expect the price to move up slightly when the OMG deal is signed, with 99.8% at $35 and Russian at $29-30. -END- | |
| November 30, 2006 Cobalt prices at $30/lb, highest in 10 years Publisher: Reuters Author: Pratima Desai | |
| (NOTE: The Company notes the error in the last paragraph of the article. BHP is offerring 5 tonnes of cobalt at $33/lb, not 5 million lbs.) LONDON, Nov 30 (Reuters) - Cobalt prices hit their highest levels in more than 10 years this week as buyers flooded the market with orders after Norilsk Nickel's decision to sell most its output of the minor metal to a chemicals firm. Traders estimate the bid/offer for high grade cobalt cathodes <COB-CATH-LON> is $30/32 a pound, the highest since February 1996, compared with around $25 a pound last week. Norilsk <GMKN.RTS> for years sold cobalt <COB-CATH-LON> to aerospace, chemical and engineering companies, but from 2007 the Russian company will supply New York-listed chemicals makers OM Group <OMG.N> with nearly all of its cobalt output. "Markets don't often move this fast, there's a lot of people looking for material" a UK-based trader said. "There was a lot of anxiety that the Russians weren't offering any material out on long term contracts ... Some people haven't been able to book any material for next year." Cobalt is used in the manufacture of aircraft engines. Traders say U.S. demand for cobalt has been high and likely to continue strong as the country's government recently passed a budget packed with long military programmes to restock and replace equipment used in Iraq. Norilsk's deal with OM Group has taken out about 2,500 tonnes of concentrate from the metals market, the trader said. "It's going into the chemicals sector instead." London-listed BHP Billiton's <BLT.L> cobalt prices have jumped this week. BHP's website (http://cobalt.bhpbilliton.com/) reported sales at $30 a pound on Monday compared with sales at $21 and $25 a pound last week. BHP was last offering 5 million tonnes at $33 a pound. -END- | |
| November 29, 2006 Cobalt market gets 'reality check' Publisher: Metal Pages | |
| LONDON (Metal-Pages) 29-Nov-06. The cobalt market has calmed down a little, at least compared to the rampant activity seen last week, that has propelled prices to the high $20s, low 30s for high grade material and the low $20s to mid $20s for 99.3%. Asked whether the market was calmer, one major trader replied: "Let's just say it hasn't gone up by $10 in the past few days. Buyers are taking a reality check and looking at what they need. We just sold some standard Chambishi at around $23.50 and would say that 99.3 is in the mid-20s. We haven't sold any high grade at the lofty heights of $30 yet, though." Another major western trader had an interesting way of describing the "new reality" which has permeated the market. He told Metal-Pages: "Yes, it's calmer, but only in the sense that there is less uncertainty and chaotic vaccum now. However, it's less calm in the sense that there is now a large volume of business beginning to take place as consumers become resigned to the 'new reality' and begin to bite the bullet and get on with buying the necessary. "The sound of gritted teeth rings through the market." This may be true of the consumers, but the trade and producers are more likely to be whistling through their pearly whites. One major producer admitted that there was less spot business this week, but reported bumper business the previous one. The Russian producer Norilsk sold 94 tonnes of metal last week - the highest on record since the company started publishing the sales figures. Sources close to Norilsk said that they still had material for the spot market, but said that allocations for next year had yet to be confirmed. The company recently announced that it has agreed to sell the bulk of its cobalt to OMG, which was the major factor driving up prices over the past 10 days. The company has done a little business this week between $22 and $23, said the sources. As Metal-Pages went online with this story, Norilsk was quoting at $23/lb, effective November 27 and BHP Billiton was still at $33/lb, the price it started quoting on November 27, having sold two five tonne lots into Europe at $27.50 and $30/lb. And so the dust would appear to be settling at the moment, but in these uncertain times it is unlikely to take much for the bulls to kick up some more and start to charge. -END- | |
| November 28, 2006 Iron-Cobalt Alloy Nanoparticle created for Imaging, Therapy Publisher: Science News | |
| STANFORD, CA, United States (UPI) -- U.S. scientists say imaging blood vessels and destroying malignant cells might soon be possible in one integrated system. The tiny system produced by Hongjie Dai and colleagues at Stanford University is a nanoparticle designed specifically with such a dual function, as well as with the additional advantage of being water soluble and non-toxic. The nanoparticle consists of an iron-cobalt alloy surrounded by a thin shell of graphitic carbon. The scientists said the iron-cobalt core has superior magnetic properties that provide high magnetic resonance imaging contrast at lower doses than required with conventional gadolinium contrast agents. The graphitic shell has more than one purpose; it protects the iron-cobalt core, making it both more stable and robust. Its surface can be functionalized so as to make the nanocrystal soluble in aqueous body fluids and allow a longer time span to carry out imaging. Moreover, it absorbs near-infrared light. The authors argue the phenomenon could be harnessed to generate localized heat and trigger a therapeutic effect, such as the destruction of cancer cells. The research is described in the December issue of the journal Nature Materials. Copyright 2006 by United Press International | |
| November 27, 2006 Cobalt Soars Publisher: Metal Pages | |
| LONDON (Metal-Pages) 27-Nov-06. Cobalt prices have moved strongly upwards again today, with BHP Billiton now offering material at $33/lb and Norilsk indicating material at $23/lb. Trade prices are indicated in a wide range with high grade material indicated anywhere between $28 and $31/lb and Russian between $24 and 28/lb. BHP Billiton made two sales today for December delivery 5 tonnes at $27.5/lb and a further 5 tonnes at $30/lb, they are now offering 5 tonnes at $33/lb for November delivery. The cobalt market is clearly in a state of flux with prices being quoted in a wide range and relatively modest volumes trading. Typically when markets readjust, as cobalt is clearly doing, there is a period of "disorderly trading" where it is very difficult to establish a firm market as those who have material hold on to it and those who want to buy material find it difficult to conclude business as there is little material on offer and prices move ahead faster than their ability to accept them. There is clearly a good deal of pent up buying for cobalt metal to be done as the timing of Norilsk's announcement of its deal with OMG, at the beginning of the mating season where consumers tie up long term contracts, will have left a number of consumers needing to source material for 2007. On the face of it, the deal whereby OMG will acquire nearly all Norilsk's production of cobalt including up to 2,500 tonnes a year of cobalt metal, up to 2,500 tonnes of crude cobalt hydroxide concentrate and up to 1,500 tonnes of crude cobalt sulphate doesn't make any difference to the number of cobalt units available to the market. What it does though is to alter the balance of the entire market with the metal market losing 2,500 tonnes of material at a time when demand from aerospace is booming and little new production is expected to come on stream until 2009. Some commentators suggest that this could leave the metal market as much as 5,000 tonnes short next year. In addition with Norilsk, who has often been perceived as a weak seller, out of the picture the bearish influence that they had on the market has been removed. With the market in a state of flux we will be watching with interest to see where prices settle and at what point the consumers will return to secure the tonnage that they need. -END- | |
| November 22, 2006 Christmas comes early for cobalt Publisher: Metal Pages | |
| LONDON (Metal-Pages) 22-Nov-06. The cobalt market continues to rally, with two of the main indicators - the BHP Billiton and Norilsk cobalt websites - reflecting the bull run on their screens. Norilsk removed its price indication this morning, and has no immediate plans to reinstate it. A source close to the company said that the price had been removed as it was creating confusion as the company's offers "weren't always in line with the site's price". "The price is indicative not a set price," said the source, who admitted that prices were moving too quickly now to maintain it. "Business has been very active. We haven't sold above $17 yet, but we will start to investigate this level," the source added. Naturally, with the bulk of its output already committed for next year, Norilsk is unlikely to be keen to flog off its metal now. The source said, though, that Norilsk will have some metal available for spot next year, although this will be clarified later. BHP-Billiton, meanwhile, hasn't been slow to hike its website offer price. The site was at $25/lb as Metal-Pages went on line, having reported a 5 tonne sale into Europe at its previous offer price of $21 earlier today. "I think this indicates that BHP-Billiton has very little in stock," said a source close to a major western producer. He added: "We have yet to sell at $21, but the market has undoubtedly been given a big boost by the news that Norilsk will be selling the bulk of its output onto OMG. This will change the mix of cobalt units available next year, reducing the availability of metallic cobalt. This is likely to encourage the melters to conclude long-term contracts sooner, rather than later." The source said that his company is in the midst of long-term talks now and that consumers have been more active. "We're not offering aggressively and the price is a lot higher than it was two weeks ago. Also, I think the market balance has shifted over the past six months. Although there have been indications that the Chinese had excess material, demand remains strong generally and supplies have dipped in other areas. The fundamentals would appear to have strengthened." You don't have to tell this to some market players - the cobalt bulls have been bellowing out this message for some time. Today, they can reward themselves for their apparent foresight. "The price, frankly, is all over the shop but nothing below $17.50 and offers are across the board and up to $20-21. It's slightly chaotic out there," said one major trader, who added: "Christmas has come early." This may be the case for some traders, but the consumers are clearly more concerned with what awaits them in the New Year. -END- | |
| September 22, 2006 BHP Billiton sells cobalt at $US20/lb Publisher: Reuters | |
| Reuters, September 20, 2006 - 9:44PM BHP Billiton has sold cobalt at $US20 per lb, its highest price for almost two years. It sold 10 tonnes of the strategic metal into Europe at $US20 per lb on Wednesday, it said on its website. Traders, many of whom are based in Britain, had reported for some weeks that small quantities of cobalt, a vital ingredient in super-alloys used in aircraft construction, had been changing hands at the psychologically important level of $US20. Now that major producer BHP has sold there, customers would be more likely to accept $US20 as a benchmark, dealers said. Some in the market had forecast that when cobalt did break through the $US20 barrier, it would rapidly rise to $US30 and beyond. "There will be a lot more interest now. It's all looking quite bullish," one dealer said. Prices of high-grade cobalt rose 25 per cent shortly after the Farnborough International Airshow in July, when engineering firms who make aircraft parts starting buying the metal to meet strong demand for planes. BHP mines cobalt in Australia. Other major sources of the metal are the Democratic Republic of Congo, Zambia, Canada and Russia. Major Russian producer Norilsk Nickel was offering low-grade material at $US16.25 per lb, it said on its website. C 2006 Reuters | |
| September 20, 2006 Lull before storm for cobalt? Publisher: Metal-Pages | |
| LONDON (Metal-Pages) 20-Sep-06. The cobalt spot market is looking a little softer this week, although observers maintain that the fundamentals still remain strong. High grade cobalt was indicated in a range of $18.25-19.00/lb, with 99.3% $16.50-17.50. Western trade sources said that business is still taking place, although the emphasis is on long-term contracts. "With the price softening you wouldn't expect customers to be looking to lock-in contracts so early," said one major western trader, who added: "It suggests that they are concerned about securing ample supplies for next year." Although the spot market has been quiet for a while, western producer sources have consistently maintained that customers are taking their optimum amounts. The latest statistics from the Cobalt Development Institute underpin this increased demand, with the figures showing that demand had increased, and supply slipped by 737 tonnes in the first half of 2006 compared with the first half of last year. The CDI didn't give an exact figure for demand as it is still finalizing the numbers. News released by Boeing this week that it is delivering 395 new aircraft this year, up from 285 last year, with a further 440 earmarked for 2007, also points to good offtake in the super alloy sector. Batteries may also get a boost, if, as expected, cobalt batteries benefit from the recent woes of the lithium-ion battery. Dell, the world's largest personal computer maker, has said it is increasing the recall of Sony battery packs used in its systems to 4.2 million units from 4.1 million units. The batteries can short-circuit and have been blamed for causing some computers to overheat. Separately, Toshiba said it was recalling 830,000 batteries made by Sony for its laptops at Sony's request. It was the latest in a growing global recall involving Sony batteries, bringing the tally of recalled batteries to about 7 million worldwide. The recall was issued after six confirmed instances of overheating or fire involving Dell systems with batteries made by Sony. Dell said customers should recheck their batteries if they had not ordered or received a replacement battery. The company began shipping replacement batteries on August 15. Furthermore IBM and Lenovo Group, which is the world's third-largest computer maker, said they were also seeking the recall of 526,000 rechargeable, lithium-ion batteries from Sony purchased with ThinkPad computers after one of them caught fire at Los Angeles International Airport last month. Apple Computer has also recalled 1.8 million batteries worldwide, warning they could catch fire. Cobalt observers are still unclear what the impact will be for the metal. However, one said that he estimated 600 extra tonnes of cobalt would be consumed in batteries in the next six months, with 300 tonnes new material and the rest already on the shelves. Another observer said it could be even more significant for cobalt, as batteries were a key sector driving the spike in prices in 2004. However, it has also been suggested that the lithium-ion problem could be a blip, with technical problems ironed out by the battery makers. That said, there have been unconfirmed reports that Jinchuan in China is moving away from the export market and turning its full attention to the domestic market, which is consuming the cobalt for battery manufacture. High purity cobalt is needed for batteries and, again, the lithium-ion problem could cause producers to move away from intermediate products to virgin material. Other sectors which are faring well include the gas-to-liquid plants and, also, Co-Cr alloys (F75), which are used as medical implants. The wars in Iraq and Afghanistan have seen an increase in demand for these alloys for the wounded. A major manufacturing base for the F75 is in the US, a region which has seen imports of cobalt increase to 11,000 tonnes from August 2005 to July 2006, up from 9,600 tonnes during the same period last year. The bulls still maintain that next year will be a bumper one for the metal. "It's the lull before the storm," they warn. -END- | |
| September 13, 2006 Cobalt players sit back and smell the coffee Publisher: Metal Pages | |
| LONDON (Metal-Pages) 13-Sep-06. After a fairly hectic summer, whereby cobalt prices rushed up from $13.60-14.10 at the start of July to a high of $19.80 in early September, the market has since settled back and market participants have been ruminating on its future course. "The market is undoubtedly strong," said one major trader, who commented: "Cobalt is like a cup of cappuccino - some of the froth may have been blown off, but the coffee is stronger underneath." He admitted, though, that the absence of froth - an allusion to market hype and some of the smaller market players who jumped onto the cobalt bull run - has put pressure on the price. "I wouldn't be surprised if BHP Billiton is forced to bring its price down to $20/lb or even $19.50 [the company has maintained its website offer price at $20.50 since 18 August, when it last made a sale at $19/lb]. The 99.3% price is also a little weaker and in the $17s. It has been quiet - and this has triggered some profit-taking. But we've been left with stronger market participants." One such participant is the Russian producer Norilsk, which, to the chagrin of some of the market bulls, has moved its price down recently. It nudged its website cobalt offer price down 15 cents to $16.25/lb from $16.40/lb, effective 11 September. Its offer price of $16.40 had been in situ since 6 September. Sources close to the company told Metal-Pages today that they had moved the price down because the market had been quieter. In addition, they said, they had received a substantially greater allocation for the spot market for the remainder of the year. The source wouldn't divulge the exact amount or the strategy behind the extra tonnage awarded. However, the source did say that "Norilsk still views the market and demand as good in the near future and for next year". Some market participants may well despair at this latest move. They have been vocal in their criticism of Norilsk's sales policy, questioning the motives behind the Russian producer's strategy to sell cheap in a strong market. One referred to the 'Russian enigma', questioning: "Why drop your offer price from $16.50 to $16.25 when the record (their website ) shows decent volume sales over the previous weeks at regularly increasing prices?" "And why express your weekly volume of sales as 'more than 30 mt'? Could it be that it was significantly more than 30 mt (eg 60/70/80 mt etc) but putting it this way camouflages the higher level of demand and, supposedly, supports their price drop?" The observer also claimed that it isn't easy to purchase the material at $16.25. Some of the more cynical believe that Norilsk could be trying to achieve "world dominance" in cobalt by capturing greater market share through its sales policy. This theory has, in part, been presented before, when the company tried to carve out substantial market share a year ago, after it failed to conclude sufficient long-term contracts. Now, of course, it has a new and powerful contender for the cobalt crown - Xstrata, which has just bought Falconbridge, which has already been renamed Xstrata Nickel. With its strong association with the Swiss-based trading and natural resources group Glencore, the "X/G group" has now effectively got control of around 11,000 tonnes of Co metal (Falco/Mopani/Murrin Murrin) which is approximately 25 % of the metal market and, possibly, 60-70 % of the flow of the low grade Co flowing from DRC (critical to China and hence critical to the global Co market future). This structural change places them by far the largest group in the Co world and, with Glencore's formidable track record in market dominance, a major force to be reckoned with. These factors are more than enough to occupy the thoughts of the cobalt participants as their pet metal takes a break. -END- | |
| August 11, 2006 Has cobalt's time come? Publisher: Metal Pages | |
| LONDON (Metal-Pages) 11-Aug-06. The cobalt price continues to rally on a number of visible and less obvious factors. There have been reports of speculative buying, including from the funds, as well as increased consumer purchases and a tightening of supplies. Clearly the market is being driven by more than one factor and at the moment is looking like it has the momentum to make further advances. High grade cobalt is currently around $16.30-17/lb, with 99.3% at $14.75-15.60. The two most visible producers - BHP Billiton and Norilsk Nickel - have both been busy moving their website offer prices up this week, with the former now offering at $16.75, having made its most recent sale at $16.50 and Norilsk still trailing at $14.15, despite incremental increases over the past weeks. The move up in values has long been anticipated by some of the more bullish market observers with one exclaiming: "For most of 2006 the cry of amazement from all [including consumers!] has been 'with Ni/Cu/Gold/Mo etc etc at all time highs, how come Cobalt - that icon of volatility - has been resting at $ 13-14/lb?' It is not only its history as a volatile animal but, more importantly, the solid and increasingly positive fundamentals should have underwritten a hitherto unseen (so far this year) price rise." Although the price has flickered up a few times this year, the latest rally has been more sustained and, according to some analysts, is likely to continue strong. Said one observer: "To date this year the jigsaw puzzle pieces haven't quite fitted but they now seem to be finally clicking into place. The negative factors have obscured the bullish facts for much of this year." The negative factors, he said, were the Russians sales strategy, which has seen Norilsk selling considerably lower than the high grade market and, according to several observers, below the 99.3% market too. Norilsk, for its part, has defended its stance saying either that the market has been quiet and well-supplied (as it was until recently) and that it wanted to maintain market share, discourage substitution, avoid accusations of opportunism and display responsibility to the market. BHP-Billiton, say observers, has also unwittingly put pressure on the market, by lowering offer prices when business was quiet. Clearly this effect has now been reversed with spate of current buying. The Chinese were another negative factor, with the major producer Jinchuan operating under a state-driven commitment to increase Co production capacity, Jinchuan was by April this year reportedly producing 320 tpm of high grade cathodes much of which was based (and dependant) on raw material from the Congo. At one stage the market was reportedly overhung by 600 tonnes of unsold stock in the hands of Jinchuan. However, Chinese sources now advise that the shrinkage of supply from the Congo has forced Jinchuan to drop actual production rates to around 150 tonnes of cathodes per month and all customers other than long term contract partners have been told that there is no additional material available for the foreseeable future. "The previous negatives have all turned into positives and added their weight to the core 'positives' which have been brewing all year," said one observer, referring to the China/Congo squeeze and good demand. Low grade suppliers ex Congo have been reducing supply (partially for domestic upgrading in DRC and partially through exhaustion of the cheaper/better sources). There has also been an increasing stranglehold on these sources controlled by "strong hands" where fundamentals of demand and supply rather than cashflow needs can be "the determinant of the deal". Meanwhile 2007 (and 2008/2009) superalloy enquiries have been "massive" for large fixed price tonnages for the aerospace industry. For the most part, as prices sunk over the last three months, the buyers were prepared to wait but, with an apparent turn in the market direction,they have now returned with a vengeance and want fixed price only rather than formula prices, according to the observer. Furthermore, the high nickel price, currently $27,000, and as high as $30,000 ($13.60 lb) this year, has raised the real possibility of an increase in usage of Co-based alloys rather that Ni-based alloys. There has also been increased Japanese buying over the past few weeks and there have been reports that some traders are reluctant to take their 'Obon' holiday next week to return later to find they have missed the last "cheap units". All told there are a number of positive, possibly explosive, elements surrounding the cobalt market. Clearly the speculators ears have pricked up and some are now positioning themselves for a bull run. And it could only be a matter of weeks before the market knows whether Xstrata will enter the fray by taking over the major cobalt and nickel producer Falconbridge. Xstrata, with its close links to the major trading house Glencore, could prove a considerable contender in the coming months and years. -END- | |
| July 20, 2006 Congo mining chief puts private sector contracts under spotlight Publisher: Financial Times Author: Andrew Englandin Lubumbashi | |
| The head of Congo's state-run mining company plans to review its private sector partnerships in the wake of concerns about the nature of the contracts and the completion of audits that revealed legal anomalies in some of the deals. In an interview with the Financial Times, Paul Fortin, managing director of Gecamines, the Democratic Republic of Congo's copper and cobalt mining company, said there was a possibility some of the contracts could be renegotiated. Mr Fortin, a mining lawyer, was appointed on December 31 as part of a World Bank programme to restructure Gecamines and revitalise the mining sector in Congo, which has some of the world's largest copper and cobalt resources. Gecamines is involved in 30 joint ventures with groups such as Phelps Dodge, OM Group and China's COVEC, as well as numerous smaller companies in the copper and cobalt-rich province of Katanga. Some date back 10 years, but most were signed after a transitional government was established in 2003 at the end of the country's last civil war. Only a few are actually mining and just one was signed after Mr Fortin's appointment. Private sector investment was deemed crucial to the revival of the industry following the collapse of Gecamines, which had a monopoly on mining, during the 1990s. At its peak in the 1980s the company produced more than 470,000 tonnes of copper annually. Today it is bankrupt with debts of $1.6bn (€1.2bn, £900m) and has not been involved in industrial mining for a decade. About $500m was expected to be invested in the sector this year, with up to $800m forecast for 2007, Mr Fortin said, if July 30 elections - the first for 40 years - pass smoothly. Some mining experts estimate that if all the projects produce, Congo could be producing 800,000 to 1m tonnes of copper annually in 10 to 15 years. But some Congolese and advocacy groups have complained about the terms of the joint ventures - which in most cases give Gecamines a minority stake - are too favourable to the private companies at the expense of the crippled state. There are also complaints about a lack of transparency surrounding the contracts. Corruption is endemic in Congo, which has endured two civil wars in the last decade, and there are few effective state institutions. "There was a lot of criticism in the public forum and I just want to satisfy myself that we are not getting the short end of the stick. I will take into account the concern there is," Mr Fortin said. "The World Bank has done a legal audit of the partnerships . . . they have made recommendations and in the latter part of the year we will address those recommendations. We will take the partnerships one by one and we will have a look at them." He said the audits revealed "some faults on the legal aspects". "I think that the laws were not respected in some cases," he added. "It could be minimal things, it could be more important things." If Gecamines enters into new joint ventures it would be through open tenders, he said. But he conceded there was little he could do legally to alter current contracts and would have to rely on mutual consent to renegotiate. "What are my alternatives, to go to court and have a contract annulled? Well I'm opening a can of worms, because then people would say you signed a contract in Congo and three years later they tell you the contract is no good, they don't like it and they tear it apart," he said. "Now try to raise money for Congo, try to develop Congo, it's like you are shooting yourself in the foot." However, he said he would consider court action against companies that failed to produce. "There are guys who perform, there are guys who are slow, there are guys who don't perform. Those who don't perform, they are on the hit list," he said. "I will give them time to perform, if they don't we will cancel the contract, we will apply to court." As part of his plans to restructure Gecamines, Mr Fortin said he would consider selling 45 per cent of the company through an initial public offering either in Toronto or London once it was "cleaned up". Copyright The Financial Times Limited 2006 | |
| June 11, 2006 Uranium price rise showing no signs of abating after surge Publisher: Metal-Pages | |
| LONDON (Metal-Pages) 11-Jul-06. With demand for uranium - primarily from the nuclear power sector - continuing to grow across the globe, there are no signs of the price rise abating, industry insiders told Metal-Pages today. From the low of US$7/pound in 2001 prices have rocketed to the current UxC price of $45.50/pound for U3O8, more than double the level quoted just a year ago. And while few believe that such a dramatic growth rate can be maintained, the consensus is that the price still has some way to go. Primary supply of approximately 104 million pounds is already being outstripped by worldwide usage, which latest official put at 172 million pounds in 2004, with current estimates now placing it nearer to 180 million pounds. Industry analyst Harvgreave Hale is forecasting relative stability for uranium pricing in the next two years, predicting levels in the $50/pound region, although the firm conceded it was that was on the conservative side. "We consider there is more risk that we have underestimated prices than overestimated them," explained a spokesperson. "Ultimately, we believe that the uranium price may well push higher than these levels. Geiger Counter Limited is a new investment company focused on the uranium and nuclear markets, that this week announced its admission to the Channel Islands Stock Exchange and commencement trading on the international board of the London Stock Exchange having successfully raised £12 million (US$22 million) via a subscription of 24 million ordinary shares. Co-manager Andrew Ferguson told Metal-Pages today that with the number of companies - from all over the world - getting involved with the uranium industry rocketing, one his firm's main priorities would be to gauge which ones has staying power, over those who would eventually fade away, something which he conceded would take some time. He was in bullish mood as far as pricing was concerned, feeling that levels of $60-65/pound were achievable within the short to medium term. -END | |
| May 19, 2006 Cobalt prices may rise as Congo output set to slip Publisher: Reuters Author: Daniel Magnowsk | |
| MARRAKECH, May 19 (Reuters) - Big mining companies' entry into the Democratic Republic of Congo will not come soon enough to meet demand for strategic metal cobalt, dealers in this opaque market said at an industry conference this week. Production of cobalt in the DRC -- the world's biggest source -- will fall in 2006 as small miners switch to copper and larger firms build infrastructure, leaving users of the metal facing higher prices. Cobalt is used in products including fighter jets, cellphone batteries and false limbs. The DRC's output of cobalt for sale on the free market would be an estimated 12,600 tonnes in 2006, down from 16,200 in 2005, Russell Grant, director of cobalt miner Camec <CFM.L> told the Cobalt Development Institute conference. Lots of cobalt comes from artisanal miners, but they were switching to copper which at recent record prices was easier and more profitable to dig out, he said. While larger mining companies including First Quantum (FM.TO), which recently bought cobalt-copper miner Adastra for its Congo operations, and Phelps Dodge (PD.N) were building infrastructure in the DRC, they would not start producing for the next few years. "The export tonnage from 2005 is unlikely to be seen again until the second half of 2008 at the earliest, and it will be done by a fundamentally different group of people," Grant said. [ID:nL17561227] While production dips, demand from world number one buyer China will rise. China's consumption will rise to 18,492 tonnes in 2010 from 11,376 in 2005, said Xu Aidong, chief analyst at Chinese research company Antaike Information Development. [ID:nL18317403] China buys ores and concentrates for refining in China, and strong demand has helped push up prices of these raw materials, she said. "There are so many Chinese companies which want to import concentrates from Africa, it gives the owners (of the concentrates) the chance to bid up the price," she said. Much demand will come from battery makers, many of whom have opened factories in China. Use of cobalt in rechargeable batteries, cellphones and portable computers would rise to 15,000 tonnes in 2010 from 11,000 in 2005, forecast Christophe Pillot, associate consultant at market research firm Avicenne Developpement, as these goods become more popular. Overall, the market could move from a slight surplus at present to a deficit, said Peter Searle, managing consultant at CRU Strategies. [ID:nL17255101] Global demand will be 70,000 tonnes in 2010 and 100,000 in 2020, he said. "On balance, while demand remains strong there is still a risk of the market being supply-constrained." GREEN IS GOOD FOR COBALT Political pressure to reduce dependence on fossil fuels, and environmental concerns about those fuels, could also boost cobalt prices. Hybrid cars powered by both traditional engines and electric motors such as Toyota's <7203.T> Prius required cobalt-containing rechargeable batteries, Pillot said, and as they make more of these cars, manufacturers will need to buy more cobalt. The amount used in hybrid electrical vehicles would be 2,500 tonnes in 2010, he said, up from less than 300 tonnes last year. Cobalt is also used as a catalyst in the gas-to-liquid (GTL) process, a new method of producing cleaner diesel fuel. As petrochemical companies invest in GTL plants, they too will need to buy more cobalt, said Gary Combes, process engineer at Johnson Matthey <JMAT.L> Catalysts, a refiner of speciality metals. "Inherently GTL will be using cobalt. The need to secure energy resources and diversify the energy mix will necessitate investment in GTL, and with it there will be pull-through demand for cobalt," he said. While some dealers leapt on this talk to justify a sharp jump in price, Pillot warned that too high a rise could erode some of this new demand. "If the price is too high, the battery manufacturers have other solutions," he said. MURKY MARKET Dealers who spoke about recent business would not be named and transparent pricing information is not readily available. "Cobalt is one of the most opaque markets we've ever known for getting statistics," Camec's Grant admitted in his speech. Those who would be drawn on business reported steady numbers. "Everyone is looking for Russian metal and the Russians have nothing left," a trader said, reporting selling such material <COB-ING-LON> at around $15 per lb, unchanged since last week, and high-grade <COB-CATH-LON> at just below $16, also unchanged. While most delegates canvassed on the sidelines of the conference agreed that they had heard very little bearish news, talk of upward movement was much less feverish than they recalled at previous meetings. "Maybe when the Russian metal runs out it will move up, but it won't be a sharp leap, it'll be more gradual," one old hand said. "Maybe at the moment it's a market in perfect balance." -END- | |
| April 14, 2006 Canadian company plans to start new cobalt mine west of Salmon Publisher: The Idaho Statesman Author: Rocky Barker | |
| Mining could begin in '07 if plan clears legal, environmental, financial hurdles A Canadian company is seeking to tap into one of the richest cobalt deposits in the world near Salmon and produce the only domestic supply of cobalt, a mineral critical to defense and the American economy.  But first, Formation Capital Corp. must resolve a lawsuit over access with its neighbor, complete a rigorous environmental review and raise the money to compete on the world market. Formation Capital has spent $25 million over the last 17 years exploring, prospecting and planning a mine in the mineral-rich area just east of the Frank Church-River of No Return wilderness. It expects to invest a total of $50 million to open the mine. The U.S. Forest Service says the mine's environmental review could be done by October 2007. Soon after, the Vancouver-based company hopes to begin digging its underground mine to produce up to 1,500 tons a year of the mineral, which is used in jet engines, hybrid cars and hundreds of other products. The company already owns a refinery in Kellogg to process silver and gold and designed to process cobalt. Cobalt sells for about $17 a pound. At a price of $13.80, the mine would produce $30 million annually, Formation officials said. At a higher projected price, $19.40, it would produce $47 million annually. Formation predicted production costs at $7 a pound in its last feasibility study, but company officials said increased energy costs will raise that. "There's a lot of upfront costs, but it saves you money later," said Bill Scales, president of Formation Capital Corp., the U.S. subsidiary based in Salmon with the same name as its Canadian parent. The company would employ 157 workers at the mine site 40 miles west of Salmon and 39 employees in Kellogg, with an annual payroll of $12 million in full production, Formation officials said. The company predicts it would pay $8 million annually in state and federal taxes. The mine's projected life is 10 years, but it is located in an area rich in cobalt, and company officials say there is a good chance the mine life could be extended. It would be able to produce 3 percent of the world's annual demand for cobalt. The U.S. accounts for 20 percent of that demand. The adjacent Blackbird mine produced thousands of tons of cobalt from early in the 20th century until the 1950s. Canadian mining giant Noranda tried to reopen the Blackbird mine in the 1980s. But it was forced to quit when mines in the Congo dumped cobalt on the market to cut the price below the level at which Noranda could make a profit. John Whitney, a mine economist from Reno, Nev., doesn't believe that can happen again. "The African production has been disrupted," said Whitney. "The maneuverability they had over the market is not there anymore." Beyond Formation's own known reserves, the surrounding area's cobalt reserves make it one of the world's richest. "Had Noranda put the Blackbird into production in 1982, it would still be in operation," Scales said.  Among Formation Capital's challenges is overcoming another legacy of the Blackbird: A defective tailings pond at the mine dumped millions of gallons of water laden with heavy metals into Blackbird Creek in the 1950s, killing off most of the aquatic life of Panther Creek, a tributary of the Salmon River, and ending a run of 2,000 salmon. After a lengthy lawsuit, Noranda, now Falconbridge, and other companies that mined the site are completing spending more than $60 million to clean up the area. The mine still bleeds contaminated water, requiring continuous water treatment. "We don't want to have another Blackbird on our hands," said J.R. Robison, who monitors mine projects for the Idaho Conservation League, a statewide environmental group. Formation intends to avoid the Blackbird's problems by using modern environmental practices including: -Disposing of waste rock in lined areas. -Adding cement to some waste and backfilling it into the mine. -Entering the deposit from above the water table to prevent drainage. -Pumping water to the surface and treating it. "We try to ignore what's beside us (the Blackbird mine) because we're an environmentally friendly mine that is not going to have any measurable impact on the environment," said Mari-Ann Green, chairman and CEO of Formation Capital. The Blackbird also presents Formation with an access problem. The companies involved in the cleanup are challenging Formation's right to use the road it has long used to get to their mine site. Formation has sued, and the issue is pending. Scales is confident the issue will be resolved so it does not delay mining. "We expect that our competitors --- Falconbridge, in particular --- might continue to resist our development of a major new source of cobalt," Scales said. "But we are also determined to overcome that resistance." Falconbridge is a major producer of cobalt in Canada. Falconbridge officials did not return a phone call. The Forest Service, which controls the public land on which the mine would be built, expects to release a draft environmental impact statement for public review in December. A record of decision could come as early as July 2007 with the entire environmental review completed by October. "Conceptually it's a good thing for the United States to have a domestic supply of cobalt, an important strategic mineral," Whitney said. "It could also be good for the state of Idaho." To offer ideas or comments, contact reporter Rocky Barker at rbarker@idahostatesman.com or 377-6484 | |
| April 12, 2006 Inco Sudbury strike fears hit US cobalt market Publisher: New York (Platts) Author: Anthony Poole | |
| Traders and consumers are saying that the possibility of a strike at Inco's Sudbury nickel mine and smelter is causing concern about the viability of supplies of high-grade cobalt in the US. So far, the fears of a strike have only affected the nickel market. Now traders and producers say that the cobalt market is assessing the impact of a strike. Inco has said it was hopeful it could agree on a new labor contract without a strike at Sudbury, but it has not stopped speculation in the trade about the possibility of there being one. While prices have yet to react to this, a trader said there were signs of "strike hedge buying" emerging from consumers. A European-based trader said that prices for 99.8% material could rise to between $30/lb and $50/lb delivered, in the event of a strike, while another trader said the market could rise by $20/lb, putting cobalt at around $35-36/lb. The second trader said that if a strike lasted for three months, it would result in around 200 to 250 mt of high-grade cobalt being taken out of the market. "I think that would push it up by around 20 bucks. But if they were on strike for a year and you lost 1,000 mt of production, then it could easily go to $50/lb." The last Inco Sudbury strike took three and a half months to settle three years ago. The Platts assessment for 99.8% cobalt rose Wednesday to $15.25 to 15.75/lb delivered from $15.2 to $15.7 last week, although prices were heard as high as $16/lb. Cobalt prices have been rising incrementally since the end of February, amid strong demand and a lack of refining capacity and low inventories of metal. But the $16 level was dismissed by a producer as being "too rich," although he did say the market was "certainly going up." He concurred that there were signs of consumers trying to ensure their supplies in the event of a Sudbury strike. He said that a strike would affect the US badly, as that was where most of Inco's production went to, but declined to say how much prices might rise in the event of a disruption. A European trader told Platts that he had received an inquiry this week from a US consumer for 250 mt of 99.8% cobalt for June 1, 2006-May 31, 2007, delivery. Last week a US consumer told Platts that it was in the market for deliveries for the whole of 2007. A trader said that the latest moves in cobalt were what made it an interesting market. "When it moves, it moves. You're either on the train or you've got run over by it... Cobalt is just pants down fun," he said. -END- | |
| February 06, 2006 GM to invest $118 million in hybrids Publisher: Automotive Business Review Online Author: Staff Writer | |
| US auto giant General Motors will invest up to $118 million to upgrade its transmission facility in Baltimore for the manufacture of a new, rear-wheel drive two-mode hybrid vehicle transmission system. The investment will create up to 87 new jobs. AdvertisementThe new hybrid transmission, which is purportedly the first light-duty integrated hybrid transmission to be designed and built in the US, will go into production next year and will initially be used in the firm's full-size SUVs, the Chevrolet Tahoe and GMC Yukon. "Our two-mode hybrid transmission is a leap forward in hybrid technology and a key part of GM's unique strategy to offer several different hybrid systems in a range of popular vehicles," said GM Chairman and CEO Rick Wagoner. "Our multi-pronged hybrid program is...capable of using ethanol/gasoline blended E85 fuel, and our cutting edge advances in hydrogen fuel-cell technology." The announcement comes just one week after GM reported losses in 2005 of $8.6 billion. The firm has recently suffered from a crippling collapse in domestic sales as rising gasoline prices spurred American drivers to turn increasingly away from gas-guzzling SUVs. -END- | |
| December 16, 2005 Toyota developing economic Li-ion battery Publisher: Metal-Pages | |
| LONDON (Metal-Pages) 16-Dec-05. Toyota developing economic Li-ion battery Toyota Motor Corp has said that it plans to push forward developments of a practical lithium ion battery to power hybrid motor vehicles in an effort to reinforce its position in the market for the environment-friendly cars. The project will be promoted by Panasonic EV Energy Co, a joint venture between Toyota and Matsushita Electric Industrial Co. in Kosai, Shizuoka Prefecture, will promote the project in conjunction with plans to develop a smaller, more powerful hybrid vehicle, they said. A hybrid car adopts a computer-controlled propulsion system combining an electric motor with a gasoline engine to realise high fuel economy. At present hybrid vehicles are mainly powered by nickel hydrogen batteries however lithium ion batteries are smaller and more powerful than nickel hydrogen batteries although more expensive and less durable. Although Japan's largest vehicle manufacturer is well ahead of the competition in the development and sales of hybrid vehicles, Toyota hopes to strengthen its position further by developing a practical lithium ion battery. -END- (Please note Formation believes the above reference to "nickel hydrogen" batteries is referring to "nickel [metal] hydride" batteries.) | |
| December 09, 2005 Cobalt shortages feared in next two years as demand surges Publisher: Metals Place - Source PMA | |
| Cobalt production setbacks in Zambia and recent problems at Falconbridge's high grade refinery in Norway, against a backdrop of anticipated soaring demand, could result in severe shortages of cobalt over the next two years, according to producers, traders and consumers. In the same week that China agreed orders for 150 new Airbus airplanes, a deal set to generate further demand for cobalt for jet engines, it emerged that Zambia's largest producer, Chambishi Metals, was delaying deliveries to customers for up to three months, as it has experienced lower production than originally anticipated. Chambishi has not said what has caused the production difficulties at its Luanshya refinery, although traders have speculated the problem was due to the raw material feed. Prices have already responded to the threat of tighter supply generally, although the latest increases for high grade material have been fairly modest compared with recent weeks. The Platts assessment for US spot cathode 99.8% rose Thursday to $16.0-17.5/lb from $15.0-17.0/lb the previous week, with traders reporting limited fresh business. Aerospace industry driving demand "We're definitely seeing more demand coming from aerospace. The aerospace [industry] is the real driving force on demand," said a producer. He added that the moving parts in jet engines required high grade cobalt and described Falconbridge grade as the "moving parts grade". A US consumer agreed. "The aerospace demand is going through the roof. All these new planes need engines, and these engines need cobalt," he said. So far, the consumer had not encountered any problems with deliveries as a result of Falconbridge's force majeure, or quality issues. He said that he did not buy directly, but through a supplier. "[They] have enough to cover us," the consumer added. Demand for use in LNG tankers also strong Another trader pointed to rising demand for cobalt in gas cargo containment systems for deep sea liquefied natural gas carriers as the so-called "dash for gas" fever continues to grip the developed world. There were a record 126 LNG carriers on order worldwide at the end of November, representing around 86% of the existing world fleet. Most of the carriers are due to be delivered in the next three years, with the largest number due in 2007, according to shipbrokers. Luxembourg steel maker Arcelor's Imphy Alloys is a major producer of alloys for use in cargo systems on LNG carriers, with its Invar M93. The company said it had supplied, or received orders to supply, the alloy on 100 LNG carriers, requiring an average of 550mt per ship. Traders estimated that world demand and production of cobalt would be finely balanced in 2005. They said demand had risen by around 4,000mt this year globally. -END- | |
| November 18, 2005 Formation aims to Develop High-Grade Cobalt Mine Publisher: Mineweb Author: Dorothy Kosich | |
| RENO--(Mineweb.com) For the past 11 years, Formation Capital (FCO-TSX) has been trying to develop the Idaho Cobalt Project, which may be the largest and highest grade primary cobalt deposit in the world. If approved by the U.S. Forest Service, the Idaho Cobalt Project, which lies within the Idaho Cobalt Belt, would finally provide the United States with domestic supply of cobalt production, including as much as 4% of world production. Historically, the Blackbird Mining District produce more than 3 million tons of cobalt, particularly for defense purposes during the Korean War. Ironically, the U.S. consumes 40% of the world's cobalt production. Cobalt demand comes from superalloys and other uses, industrial chemicals, carbide cutting tools and magnet industries, and the battery sector. Cobalt is a prime source metal for the production of green energy, including batteries for the electric, fuel cell and hybrid automobile and other industries. Increased demand for rechargeable batteries will also increase cobalt demand. Cobalt is also used in medical applications including cancer treatments. The Idaho Cobalt Project (ICP) would also provide more than 150 jobs to Lemhi County, which has been suffering from double-digit unemployment in some communities. The project is located 40 miles from the town of Salmon. In an interview Thursday with Mineweb, Formation Chairman and CEO Mari-Ann Green said a recent poll found 80% of local residents support the project. Since it began staking the properties near the Blackbird Mine owned by Falconbridge, Formation has purchased the Big Creek Hydrometallurgical Complex in Kellogg, Idaho, which includes the Sunshine Precious Metals Refinery. Basically, Formation bought the complex at a firesale price of $1.2 million for a facility which would take $20 million to $40 million to build today. Green said the 2002 Small Business Relief and Brownfields Liability Act has permitted Formation to buy the complex without past environmental liability. The retrofit of the complex is estimated to cost between $6 million and $7 million. The facility include an acid pressure leach hydrometallurgical plant that can be adapted to receive cobalt concentrates, a stand-alone gold and silver refinery, and a small SX-EW copper refinery. The complex also includes a modern and permitted tailings facility, office and storage space to handle all planned cobalt refining operations. The hydromet complex would have the capacity to treat 17,000 tons of cobalt concentrate to produce 4.9 million pounds of cobalt. The gold/silver refinery, which was restarted during the third-quarter 2004, is expected to begin generating cash flow in fiscal 2006. Historically, the Sunshine Precious Metals Refinery was recognized as the best quality available with assays consistently in the range of 99.99% silver. The plant is equipped to produce 1,000-ounce silver bars, silver crystal and other physical metal products. Green said a major silver producer will be the anchor customer for the silver refinery restart. After retrofitting, the acid pressure leach hydromet plant "will be ideally suited to treat cobalt concentrate," as much as 3.3 million pounds of cobalt annually, according to Formation. The nearby cobalt processing facility would also provide Formation with more direct control over its supply chain, according to Green. She explained the cobalt contains arsenic and is normally processed in other countries. The Sunshine plant will provide nearly 40 jobs in Shoshone County. The project is in the bankable feasibility and advanced permitting stage. However, the feasibility study has been delayed from completion this month to the first quarter of 2006 due to personnel changes within Hatch Engineering, which is performing the study. The Forest Service pushed back the schedule for the Draft EIS and the Record of Decision by two months to January and May 2006, respectively, and also decided not to approve the Exploration Decline Plan of Operations under a categorical exclusion. Instead, the Forest Service decided not to review the decline until completion of EIS for the Mine Plan of Operations. Nevertheless, Green said the delays have proved to be beneficial, providing additional time for Formation to "go through all aspects of the feasibility study." Among the principals conducting the study are Hatch Metallurgical. The Forest Service and Formation continue to test and evaluate the Dynamics Systems Model, which analyses the effect of several mining operation scenarios on surface and ground waters. The $1 million model is aimed at demonstrating there will be no measurable impact on surface and ground waters. If approved, the ICP would develop and operate an 400-ton per day underground mine and mill complex (ultimately expanding to 800 tpd) with an annual production rate of 2.6 million pounds of cobalt, 2 million pounds and copper and 3,400 ounces of gold over the 10 to 12-year mine life. Measures and Indicated Resource is estimated at 26.2 million pounds of cobalt, 24.4 million pounds of copper, and 30,500 ounces of gold. The start-up cost of the mine was originally projected at $46 million with a production cost of in a 2001 pre-feasibility study. However, Green said she expected that cost would increase by the time the mine is permitted. Past mining activities in the Idaho Cobalt Belt have indicated the greatest potential environmental risk has been water quality. Formation's Plan of Operations provides for the disposal of waste rock and tailings in a line storage facility. The tailings would be dewatered prior to disposal and all water is being recycled. Approximately half of the tailings produced at the mine would be used underground as backfill. The remainder will be disposed of in the TWSG using a dry stacking method, eliminating the need for a dam. Green said Formation is aiming to achieve a "green cobalt" mining operation, including elements such as being a good neighbor, responsible mining, environmental usage, providing economics benefits, and helping national security. She added that the mine site naturally lends itself to environmentally sound mining design. Major issues possibly affecting project permitting have been identified as water quality, controlling acid rock drainage, possible impacts of Chinook and Steelhead salmon, the Bull Trout, protecting the Blackbird mine remediation, and transportation of workers, supplies and concentrates. Formation has consulted with the Shoshone Band in Pocatello, Idaho, and with the National Marines Fisheries. The company recently hired the Gallatin Group and lobbyist Peter Skamser to educate elected officials, agencies, and the general public about the benefits of the project. Neighboring Falconbridge and federal agencies are working together on a $60-million remediation program to clean up 800 acres at its nearby Blackbird minesite. The Blackbird has historically been blamed for contamination which killed salmon in nearby creeks. Green explained that Joe Scheuering, who formerly was in charge of the Blackbird clean-up, is now the manager of the ICP. In a report published June 16, 2005, metals analyst Ron Coll of Jennings Capital wrote that "the company has the potential to be one of the lowest-cost producers of cobalt in the world. Cobalt prices have risen 50% by year end 2004 and remained firm in the current $17/lb level during June 2005." Using a cobalt price of $16/lb, Coll suggested a 12 month target of Cdn$1.70 per share for Formation. For the past decade, cobalt prices has average $18.60 per pound. GFMS has forecast a cobalt price range from $13.80 a pound to $19.40 per pound between 2003 and 2010, according to Formation. Last May, newsletter writer Peter Grandich declared, "With no disrespect to any and all of the other companies with which I have been associated, none ever surpassed the level of dedication shown by FCO management in seeing things through for its shareholders--no mater what it took (and most important, what they gave up for shareholders to ultimately benefit). In an age where corporate mismanagement, mistrust and total disregard for shareholders has come to the forefront, shareholders of FCO have much to be proud of when it comes to their management team." The company has largely financed its work through its shareholders, according to Green. A total of 161.9 million shares of been issued. Formation has a market cap of Cdn $37,251,624 with no long-term debt. Shares have traded from a 52-week low of Cdn19-cents to a high of 71-cents. The property contains more than 20 distinct target zones of which four have been drilled to date. A reclamation bond for the project could run $15 million, according to the Forest Service. -END- | |
| November 18, 2005 Cobalt blues? Not over the long haul Publisher: Reuters Author: Steve James | |
| NEW YORK, Nov 18 (Reuters) - Cobalt may just be the new copper. Or aluminum. Or steel. Possessing neither the glamour of precious metals like gold nor the industrial muscle of iron, this silver-white by-product of copper or nickel mining has always been considered a minor element on the world trading markets. But cobalt is suddenly in vogue, thanks to surging demand for products that contain it. Known since at least 2000 B.C. as a coloring agent that produces a rich blue hue to glass, the metal now is an integral part of orthopedic implants, rechargeable batteries for hybrid cars and cameras, and aircraft engines and armor systems. Mining companies are responding by stepping up production. Canada's Inco (N.TO) will develop a nickel-cobalt mine in the French Pacific territory of New Caledonia, while U.S. copper giant Phelps Dodge (PD.N) just acquired a controlling stake in a vast copper-cobalt deposit in Democratic Congo. Although increased supplies have driven down the price of cobalt to lows of about $13 per pound from around $19 at the beginning of the year, analysts see rising demand pushing it back up to the $18-to-$25 range through 2008. "Twenty-first century vehicles will incorporate increasing amounts of hybrid technology, and this will cause a profound influence of the cobalt landscape," Roland Chavasse, a trader with SFP Metals (UK) Ltd., told a metals conference in June. Along with demand, analysts see supplies increasing dramatically as the Inco and Phelps Dodge projects come onstream. According to the British-based Cobalt Development Institute, global cobalt production is small -- 50,000 tonnes in 2004 -- compared with 17 million tonnes of aluminum and 15 million tonnes of copper. But the president of Tenke Mining Co. (TNK.TO), Phelps Dodge's minority partner in the Tenke Fungurume project in Congo, said the mine's production could be as high as 40 percent cobalt, with 60 percent copper. "We start with 4,000 tonnes, but as we expand, we will become quite significant producers," Paul Conibear told Reuters. "Ultimately we will be a dominant producer." Conibear said cobalt is a strategic metal, essential in producing high-strength steel alloys for military armaments. But the biggest growth is in rechargeable batteries as more and more consumers buy gadgets that require them. On average, he said, deposits of copper and cobalt appear in a 10-1 ratio. "So if we produce a pile of copper, there's quite a bit of cobalt along for the ride." But in the short term, if cobalt demand and prices rise as Vancouver-based Tenke anticipates, the company has the flexibility to go into areas of higher-grade cobalt. "Copper won't always be high, and cobalt tends not to follow copper markets," said Conibear. 'MYSTERIOUS' PRICING Peter Schiff, chief executive of Newport Beach, California-based brokerage Euro Pacific Capital, said he encourages clients to invest in mining stocks because of the potential for underexposed commodities such as cobalt. "Look at copper reaching all-time highs," he said. "But globally over the last decade, there has been a substantial underinvestment in mining." Schiff pointed to Chinese-driven Asian economic growth as driving up demand for natural resources. "Companies like Phelps Dodge can see the trends," he said. "There are all kinds of metals out there with different uses -- why not gobble them up?" Mining industry analyst Charles Bradford of Bradford Research/Soleil took a more cautious view of the cobalt rush, noting that with the new projects, a great deal of tonnage is potentially coming onstream. "(But) Cobalt is heavily aero-space related, which means it's probably on the upswing," said Bradford, who also noted the potential with hybrid cars. "Cobalt is a meaningful revenue source." Meanwhile, major miners like Australia's BHP Billiton (BLT.L) and Russia's Norilsk Nickel (GMKN.RTS) have lowered their reference price for cobalt in a market that traders, rather than producers, have traditionally controlled. "The price is like the weather," said Tenke Mining's Conibear. "It's a commodity whose price ranges are not particularly in tune with economic growth or decline. There is a mysterious aspect to it." As the market watches to see the effect of new supplies and expected demand, one trader in London was taking an optimistic view. "There may be another $1 or $1.50 to go before we reach the bottom," the trader said, "but the lower it goes, the bigger the bounce when it turns." -END- | |
| November 16, 2005 Falconbridge declares force majeure on cobalt Publisher: Metal Pages | |
| LONDON (Metal-Pages) 16-Nov-05. North American nickel-cobalt producer Falconbridge has declared force majeure on cobalt shipments to Asia and on return sales to BHP-Billiton, following problems at the company's Norwegian refinery, the company confirmed today European deliveries should be met, said a Falconbridge source, as the lead time is shorter and contractual obligations coming close to completion as the year ends The source was not sure on the situation in North America. However all told the Kristiansand refinery is expected to lose around 250 tonnes of cobalt (out of annual company production of 5,000 tonnes) due to problems at the nickel-cobalt separation plant Falconbridge also expects to lose around 2 000 tonnes of nickel. "We realized that something was wrong at the plant around the 5th of November and began to shut it down. Nickel production has come back on line and cobalt is coming back up as we speak" said the source who added: "However, the early batches could contain higher levels of nickel and it may have to be sold as lower grade." The company has also been out of the spot market, although the source did admit that sales have been minimal in recent weeks. The Falconbridge force majeure has already impacted the market, with the BHP-Billiton cobalt website selling 35 tonnes of metal at prices ranging $12 10-12 88/lb yesterday and then shutting up shop. The site is back quoting today, having moved its quotation up substantially from $12.10 two days ago to $13.50 for November delivery. The bulls, meanwhile, are in their element. Said one major western trader: "The western producers carry zero stocks. It's an accident waiting to happen. In the past 24 hours I've had 600 tonnes of enquiries for Falco material. If someone comes in for 50 tonnes the price could hit $20. At the moment I'd say the market is $14-15/lb for high grade, although I'm holding off from selling. Lower grade is still lagging at $12.50-13.50." The trader predicted global consumption at 60,000 tonnes this year. "The aerospace industry is sucking in cobalt like never before," he told Metal-Pages. "Falconbridge demand alone is around 9,000 tonnes and demand at our own offices has gone up 25% this year. The fundamentals are just so strong." This wouldn't have appeared to have been the case just three short days ago - with the market creeping down towards $12. However, a week can be a ve |
