Glencore ceases to stockpile cobalt

Glencore has stopped stockpiling electric vehicle battery material cobalt, its CEO Gary Nagle said on Wednesday, adding though that the market was likely to remain in surplus for another 18 to 20 months.

In August last year, the London-listed miner said it had stockpiled cobalt in the first half of 2023, cutting supplies to the market to support prices of the metal.

Glencore did not say at the time how many tons cobalt it had stockpiled and on Wednesday Nagle declined to comment on the current level of those stocks.

Large surpluses of cobalt created by accelerating production of the metal over the last year in top producer Democratic Republic (DRC) of Congo have pushed cobalt prices to around $12 a lb, the lowest since 2016.

“Our best guess now is it will probably take 18 to 24 months to work through this surplus,” Nagle said at a briefing, adding that demand from the aerospace and defense industries was strong.

“We’re not really stockpiling anymore, in fact we’ve actually sold down a bit of our stocks.”

China’s CMOC Group is ramping up cobalt production at its mines in Congo where it forecasts output to reach about 100,000 tons by 2028.

According to Darton Commodities, Congo produced 77% of global cobalt supplies or more than 170,000 tons last year.

The cobalt market could see be remain in surplus by about 28,000 tons and 24,000 metric tons this year and in 2025 respectively, according to Macquarie.

“We should look at this as a short-term mismatch rather than a structural change in the market,” Nagle said. “There isn’t another big copper cobalt mine coming on … It does give the market a chance to rebalance.”

However, cobalt prices are unlikely to return to heady heights of 2018 and 2022 as demand from the electric vehicle sector is likely to keep sliding due to new battery technologies that exclude cobalt.

(By Pratima Desai and Felix Njini; Editing by David Evans)