Cobalt Report (Part 1): World Production By Country

Editor’s Note: In July 2018, Investing News provided a global summary for cobalt production.  The country list originated with the USGS report.  One name not on the list was China, but this was due to the fact that China production originates outside the country.  The cobalt supply deficiency in China demonstrates the “China mineral paradox”.  To be clear, China is the leading producer of EV batteries and underlying material (including lithium, cobalt, etc.) in the world.  As China continues vertical integration for the EV industry; growing internal processing capabilities, the search for new mineral supplies will continue.  See Cobalt Report (Part 2) for insight into the dramatic cobalt production in China.

This is the story that ran in Investing News:

The metal’s positive performance is being driven by excitement about electric vehicles. The lithium-ion batteries that power these cars require lithium, graphite and cobalt, among other components, and demand is expected to keep rising as the shift toward electric vehicles continues.

Given those circumstances, it’s particularly interesting to look at top cobalt production by country. According to the latest US Geological Survey numbers, global supply decreased in 2017, falling slightly to 110,000 MT from 111,000 MT the previous year. Read on for a closer look at cobalt supply.

1. Democratic Republic of Congo (DRC)

Mine production: 64,000 MT

The DRC is by far the world’s largest producer of cobalt, accounting for roughly 58 percent of global production. The country has been the top producer of the metal for some time, and its output remained the same from 2016 to 2017 at 64,000 MT.

As demand for cobalt rises, increasing attention is being directed at the DRC. Cobalt mining in the country has been linked to human rights abuses — last year, Apple (NASDAQ:AAPL) temporarily stopped buying cobalt mined by hand in the DRC. In addition, Congress in the DRC recently passed a revised mining law that is set to increase taxes on cobalt and other metals; the news has left miners concerned about how they may be impacted, and could push cobalt prices even higher.

Despite those challenges, the DRC is likely to remain key to the cobalt market for the foreseeable future.

2. Russia

Mine production: 5,600 MT

Russia’s cobalt production increased slightly in 2017, coming in at 5,600 MT compared to 5,500 MT the previous year.

With concerns about DRC cobalt running high, some automakers are calling for increased electric vehicle battery production in Europe. It’s possible that this push could prompt higher cobalt demand from Russia in the future — the only question is whether the country will be able to keep up. While its cobalt reserves stand at 250,000 MT, Russia is still well behind the DRC in terms of production. Large Russian miner Nornickel (MCX:GMKN) produces cobalt, and is working to reduce stockpiled material this year.

3. Australia

Mine production: 5,000 MT

Australia saw another drop in cobalt production from 2016 to 2017, with output sinking from 5,500 MT to 5,000 MT. Like many other countries on this list, cobalt produced in Australia is a by-product of copperand nickel mining. The country’s nickel mines are located in the western part of the country, mostly around the Kalgoorlie-Leonara regions.

As the DRC becomes increasingly challenging for miners, Australia is another country that’s receiving more attention as investors try to divert their interests away from Africa. Riding this wave of attention, Clean TeQ Holdings (ASX:CLQ,TSX:CLQ) raised an impressive AU$150 million in March 2018.

4. Canada

Mine production: 4,300 MT

Canada was the fourth-largest cobalt producer in the world in 2017, with output increasing marginally from the previous year. As with Australia, Canadian cobalt comes mostly from large nickel and copper mines that produce cobalt as a by-product of their normal operations. Some of these major nickel and copper deposits are Kidds Creek, Sudbury and Raglan.

In the last couple of years, a number of junior miners have rushed to Cobalt, Ontario to stake land. The site is located near the Quebec border, and is known for producing large quantities of silver in the past. Now hopes are high that the area could be a cobalt hotspot. It’s still early days for many of these companies, but if they are successful it’s possible Canada’s cobalt production will rise in the coming years.

5. Cuba

Mine production: 4,200 MT

Cuban cobalt production remained the same year-on-year in 2017, at 4,200 MT. The country’s Moa region is home to a joint venture nickel-cobalt operation held by Canadian firm Sherritt International (TSX:S) and General Nickel Company of Cuba. Hurricane Irma ripped through the country in September 2017; luckily for Sherritt, the company reported minimal damage.

Cubaniquel, the country’s state-owned nickel miner, has announced higher targets for cobalt for 2018.

6. Philippines

Mine production: 4,000 MT

The Philippines is the sixth-largest cobalt producer in the world, putting out 100 MT less in 2017 than the year before. That is a small dip considering the country’s decision to shut down 28 various open-pit mines due to environmental concerns.

The fate of mining in the Philippines is up in the air as President Rodrigo Duterte and Environment Secretary Roy Cimatu deliberate over a country-wide ban on open-pit mining. As of November 2017, Duterte “had rejected a recommendation by the Mining Industry Coordinating Council (MICC) to lift the ban,” according to Reuters. The president cited environmental degradation as his main concern.

7. Madagascar

Mine production: 3,800 MT

Madagascar’s cobalt production remained the same from 2016 to 2017. According to MBendi Information Services, the Ambatovy nickel-cobalt mine is the largest and most advanced mineral project in the country. It is located about 80 kilometers east of Antananarivo.

Sherritt International used to own 40 percent of Ambatovy, which cost more than $5 billion to develop. Late in 2017, Sherritt transferred 28 percent of its stake in Ambatovy in order to reduce its debt load. It will retain 12-percent ownership in the mine, and will continue on as operator until 2024.

8. Papua New Guinea

Mine production: 3,200 MT

Papua New Guinea is a newcomer to this year’s list of top cobalt production by country. The small country off the coast of Australia produced 3,200 MT of cobalt as a by-product of nickel production. The country’s main cobalt producer is the Ramu nickel mine near Madang. The mine is a joint venture between private company MCC Ramu NiCo (85 percent), Highlands Pacific (ASX:HIG) (8.56 percent) and the Papua New Guinea government (6.44 percent).

In May 2018, Highlands signed a deal that will increase its ownership of Ramu to 11.3 percent and reached a C$145-million streaming agreement with Canada’s Cobalt 27 Capital (TSXV:KBLT).

9. Zambia

Mine production: 2,900 MT

Zambia’s cobalt production fell 100 MT in 2017. It is the third-largest cobalt producer in Africa, and while many see a bright and fruitful future for the country, political uncertainty and power supply have posed obstacles in the growth of the country’s mining industry. Among other things, Zambia has rolled back royalties that were set in 2015, facing backlash from the mining sector. Amendments were made to lower rates to appease miners, but there is a lingering distrust of the government in the industry.

10. New Caledonia

Mine production: 2,800 MT

New Caledonia’s cobalt production dropped last year, sinking from 3,390 MT in 2016 to 2,800 MT in 2017. A subsidiary of France’s Eramet (EPA:ERA) mines substantial deposits of oxidized ore (garnierites) at four mining centers located in the north and south parts of the country. The ore is processed at the company’s Doniambo smelter, which is the world’s largest ferronickel-producing plant.

Where’s China?

We were surprised to see that China didn’t make the list this year since it was the second-largest cobalt producer in 2016. We reached out to US Geological Survey and learned that China’s cobalt production numbers turned out to be much lower than originally noted

USGS Information:

Congo (Kinshasa) continued to be the world’s leading source of mined cobalt, supplying more than one-half of world cobalt mine production. With the exception of production in Morocco and artisanally mined cobalt in Congo (Kinshasa), most cobalt is mined as a byproduct of copper or nickel. In 2017, average annual cobalt prices more than doubled, owing to strong demand from consumers, limited availability of cobalt on the spot market, and an increase in metal purchases by investors.

Growth in world refined cobalt supply was forecast to increase at a lower rate than that of world cobalt consumption, which was driven mainly by strong growth in the rechargeable battery and aerospace industries. As a result, the global cobalt supply was expected to remain limited in the near term. China was the world’s leading producer of refined cobalt and a leading supplier of cobalt imports to the United States. Much of China’s production was from ore and partially refined cobalt imported from Congo (Kinshasa); scrap and stocks of cobalt materials also contributed to China’s supply. China was the world’s leading consumer of cobalt, with nearly 80% of its consumption being used by the rechargeable battery industry.

World Mine Production and Reserves: Reserves were revised based on Government or industry reports.

United States 690 Australia 5,500 Canada 4,250 Congo (Kinshasa) 64,000 Cuba 4,200 Madagascar 3,800 New Caledonia9 3,390 Papua New Guinea 72,190 Philippines 4,100 Russia 5,500 South Africa 2,300 Zambia 3,000 Other countries 7,600

World Resources: Identified cobalt resources of the United States are estimated to be about 1 million tons. Most of these resources are in Minnesota, but other important occurrences are in Alaska, California, Idaho, Michigan, Missouri, Montana, Oregon, and Pennsylvania. With the exception of resources in Idaho and Missouri, any future cobalt production from these deposits would be as a byproduct of another metal. Identified world terrestrial cobalt resources are about 25 million tons. The vast majority of these resources are in sediment-hosted stratiform copper deposits in Congo (Kinshasa) and Zambia; nickel-bearing laterite deposits in Australia and nearby island countries and Cuba; and magmatic nickel-copper sulfide deposits hosted in mafic and ultramafic rocks in Australia, Canada, Russia, and the United States. More than 120 million tons of cobalt resources have been identified in manganese nodules and crusts on the floor of the Atlantic, Indian, and Pacific Oceans.

Substitutes: In some applications, substitution for cobalt would result in a loss in product performance. Potential substitutes include barium or strontium ferrites, neodymium-iron-boron, or nickel-iron alloys in magnets; cerium, iron, lead, manganese, or vanadium in paints; cobalt-iron-copper or iron-copper in diamond tools; copper-iron-manganese for curing unsaturated polyester resins; iron, iron-cobalt-nickel, nickel, cermets, or ceramics in cutting and wear- resistant materials; iron-phosphorous, manganese, nickel-cobalt-aluminum, or nickel-cobalt-manganese in lithium-ion batteries; nickel-based alloys or ceramics in jet engines; nickel in petroleum catalysts; and rhodium in hydroformylation catalysts.

 

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