Metals Report Cobalt shows political clout

Cobalt has proved to be one of the most volatile of minerals in the past year, due largely to the shifting sands of African politics rather than purely economic factors.

“Cobalt carries more geopolitical weight per tonne than most metals,” says Roskill Information Services of London in its 1986 study of cobalt.

The consulting firm’s study goes beyond the details of cobalt’s use in superalloys, magnets, paint driers and cemented carbides. It delves into the realms of international law and American foreign policy.

“Cobalt is a sensitive subject in the U.S.: a sudden (if temporary) rise in price, such as that in early 1984, produces an immediate flurry of talk of substitution.”

During 1985 the price of cobalt fell steadily to as low as $3.60(US) per lb in early September from about $11 a lb at the beginning of the year. The price bounced back to $7 by Sept 7, then fell to less than $4 in mid-November before moving back over $6 by mid-December.

The sudden spike-up in cobalt prices during September was directly linked to efforts by Zaire and Zambia to seize control of the market. They account for well over half of all cobalt production in the world and the price decline in the first half of the year was largely due to a price war as each sought to improve their market share.

That decline came to an abrupt halt in late August when, together, they temporarily halted sales and warned of low stockpiles.

In Canada, cobalt is largely produced as a byproduct of nickel and copper production. Inco and Falconbridge are the top producers here while Sherritt Gordon refines cobalt on a toll basis for several other producers, incl uding American operators. Canada accounts for about 5.7 million lb of cobalt a year, about 10% of world production.

Cobalt’s price volatility lies in its importance as a superalloy with about half of world production going to the United States which has very little in the way of cobalt resources.

Cobalt, at current market values, is not a significant factor when determining whether copper and nickel reserves are economic. But it is of considerable importance as a constituent of ocean-floor nodules and so has been important during discussions on the United Nation’s Law of the Sea treaty.

“Misperceptions of probable trends in the markets for both nickel and cobalt have indirectly contributed greatly to the final withholding of support of the treaty by both the U.S. and the U.K.”

Cobalt may seem a relatively insignificant metal, but “the tentacles of its influence spread wide,” says Roskill.

For instance, under the terms of the Law of the Sea treaty, the Gulf of Sirte in the Mediterranean Sea off the coast of Libya is clearly international water; under the treaty the presence there of the U.S. Sixth Fleet during the Libyan crisis earlier this year was clearly permissible and could legally be defended. But the U.S. had not signed the treaty and therefore its case in regard to Libya was greatly weakened.

Roskill sees a new producer price for cobalt of about $7 a lb being maintained. If so, “the benefit will be felt by producers and consumers alike: the wild instability of recent years has made a mockery of rational forward planning.”