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US Department of Energy
Cobalt a Critical Rare Industrial Metal Vital to U.S. Energy Policy
Cobalt was discovered around 1736 by Georg Brandt a Swedish chemist. The element was found to give glass a hint of blue. For centuries cobalt has been used as a pigment in glass and porcelain. Chinese artisans used it to color their vases and other ceramics. Over the last few decades cobalt has had a grand resurgence. In the late 1970′s Zaire, now Democratic Republic of Congo had a bloody civil war which cut off the world from much of the production of cobalt. During this time alternatives had to be found because the price of the rare industrial metal accelerated beyond what industry was willing to pay. Since then the amount of uses for Cobalt have expanded to the point where the US Department of Energy added cobalt to its, “Critical Materials”, list.
This metal has found its way into many of our technological applications used today. Cobalt’s uses include aerospace, green tech, pigments, dyes, batteries, wireless technology, computers, magnets, desulfurization of crude oil, orthopedic implants and high-strength superalloys. The use of cobalt in superalloys is mainly due to its corrosion resistance, temperature stability, and wear resistance. These attributes make it highly suitable to aircraft engines and gas turbines. The US Department of Energy predicts that electric powered vehicles (PHEVs and EVs) will need an estimated 9.4 kg each of cobalt. By 2012 the estimated sales of hybrid and electric vehicles worldwide is approximately 2.2 Million, and by 2015 to be at least 10% of the world auto market. Wind energy also uses large amounts of cobalt within its turbine blades and samarium-cobalt magnets.
The US Department of Energy has made it clear that any rare industrial metal used in clean energy technology such as electric vehicles, solar cells, wind turbines and energy efficient lighting will be deemed critical. The problem for the USA lies in its supply of cobalt. Still today over 40% of global production is from The Democratic Republic of Congo. China has an agreement with the DRC to export all of the cobalt to China where it is refined. Once again China has a stranglehold on rare industrial metals similar to what is happening in the rare earth market. The big difference is with rare industrial metals it is much more difficult to expand supply. There are very few known deposits of cobalt, most production is a by-product of copper production. The USA has been recycling 15% of its cobalt and importing 85% from foreign sources. The bad news for the USA is that China needs cobalt as well. Currently the USA has only one mine that is being prepped for production in Idaho. This mine will primarily produce cobalt totaling 3% of the global supply. The main players in cobalt refining are China, Finland and Canada. According to the USGS in 2010 the total world production of cobalt was around 88,000t.
If a person is looking for a way to profit from cobalt there are a few options. A person could buy stocks of mining companies that have rights to cobalt mines, which is the traditional method. Recently the London Metals Exchange (LME) launched a cobalt contract traded in 1 metric ton lots of 99.3% pure cobalt. The other option is buying cobalt in Germany and having it stored 100% allocated in Switzerland. A company that offers the option of buying cobalt in smaller quantities is Swiss Metal Assets. Although cobalt is only one of the various rare industrial metals they offer.
By: Randy Hilarski - The Rare Metals Guy
Source: http://www.buyrareearthmetalschinaprices.com
Rare Earth Metals to Rise
Yesterday was by far the most hectic day I’ve had since coming onboard RareMetalBlog. In the AM, for a time, everything was quiet and relaxed. Not in a serene âsink into a warm bath with a glass of Glen Rothes way, but in an eerily relaxed, something’s about to go wrong manner. Perhaps nervous energy is clairvoyant.
Then the phone started to ring. And ring. People justifiably excited, curious, concerned. The Shin-Etsu release outlining their drastically rising rare earth prices, which my colleague Robin Bromby already discussed here, seemed to be just the beginning. Movement in the majority of rare earth stocks, the big Molycorp sell, China’s consolidating 35 REE companies in Inner Mongolia under Baotou. These would have all been justifiably large points of interest in and of themselves.
But they weren’t what everyone was focussing on. Or, rather, they weren’t people’s primary focus. Reports of rare earth prices in China raising by 50%, 90%, 125%, all in the course of Tuesday evening, were what everyone was talking about. 500$+ raises in Dysprosium kg prices, within a couple of hours, were bandied about.
Unsurprisingly, I spent almost all of yesterday on the telephone, and well into the evening (bloody time zones). I spoke with analysts in Tokyo, someone from the US Department of Energy, CEOs, a fellow at the Royal Institute of International Affairs (Chatham House) in London, renowned REE specialists. I even stayed up until the wee hours and rang a few connections from Beijing.
Using a typical supply and demand Smithian economic model, the most natural assumption for drastically raising prices is an influx in demand. However, Chinese REE market experts I spoke with told me that trading volumes have been low (with the caveat that separation plants seem almost loath to sell anything).
Opinions differed greatly, but, in the end, it seems to boil down to this.
The Molycorp share sale announcement, with insiders reportedly selling up to 24% of outstanding shares (referred to in the aforelinked article as “an abandonment” by Byron Capital Markets analyst Jon Hykawy) was responsible for the slight dip in share prices in many rare earth companies, which has already stabilised and corrected itself. No great surprises there. A major player in any field has a serious selloff thrust upon itself, and, for a couple of hours at least, the bulls start screaming bear. This frequently wanes quickly, after an Advil (or a Red Bull) and a quick look at why they were bull on the market in the first place. This was no exception.
The much more interesting aspect of all of yesterdays news was the spectacular price increases, and the Baotou consolidation. The Chinese Ministry for Information and Technology’s statement yesterday that they had consolidated, restructured, or closed down 35 REE companies, giving Baotou Steel Rare Earth Group a monopoly on Inner Mongolian rare earths.
This has been anticipated for some time, and a similar move with the companies in the south would also not come out of left field.
The consolidation, and the price increases, are in no way autonomous events. To be honest, the word communique© springs to mind. China is lightyears ahead in the REE space, and they’re well aware of it. Sun Tzu wrote: “One hundred victories in one hundred battles is not the most skillful. Seizing the enemy without fighting is the most skillful”, and here one can see the associative application.
It’s a demonstration of strength, to be sure, but also a suggestion. China wants foreign REE companies to work with them. Open offices and plants in the Middle Kingdom, give credence to Baotou’s newly approved Rare Earths Product Exchange, and generally feed into the world’s quickest growing economy.
This is going to be quite the summer. Best check to make sure my subscriptions to the People’s Daily and the SCMP are up to date. Seems I’ll be needing them.
Thursday, June 09, 2011
by Byron Hawes