By Karan Kumar - Exclusive to Cobalt Investing News
China biggest exporter to United StatesLara Smith, Managing Director of Core Consultants, a mining advisory firm, said the cobalt industry is quite volatile. “From that perspective, it does not take much to send the market into oversupply,” she told Cobalt Investing News in an interview. “China represents the largest exporter of cobalt to the United States. There is the growing threat that as China accounts for the lion's share of cobalt refinement and indeed leads the supply of cobalt imports to the United States, that China could restrict exports of cobalt as they have done with numerous other commodities. This could lead to greater price volatility and increased price disruption. Overall we are bullish on this sector as we see continued demand for cobalt.” The Democratic Republic of the Congo supplies nearly two thirds of the world's cobalt, most of which is refined in China. “You end up with this triangle of Africa, China, and the world,” Smith said, adding that more cobalt miners are needed to cut price volatility and supply disruption in the market. New supply coming on board The availability of refined cobalt was twelve percent higher in the first half of 2011 compared with the same period a year ago, the US Geological Survey reported recently. “In the next few years, global increases in supply from existing producers and new projects are forecast to outpace increases in consumption. If an oversupply of cobalt takes place, it could lead to a downward trend in prices,” the report said. Canada's Formation Metals Inc. (TSX: FCO,OTC Pink:FMEWF,FWB:FOQ1) plans to start production later this year at its Idaho Cobalt Project, which is located in East Central Idaho and has production estimates of 1,525 tons of superalloy-grade, high-purity cobalt metal annually over a minimum ten-year mine life. The project's output will be equivalent to 3.3 percent of global cobalt supply and will be able to feed nearly 15 percent of North America's cobalt demand. Puget Ventures Inc. (TSX: PVS,FWB:3P0) has a project at Werner Lake in Northwestern Ontario which it says has a near-term production focus. In December 2010, the company signed a deal to raise C$20 million to develop a Russian asset that has the potential to be the world's largest non-African primary cobalt deposit.
Securities Disclosure: I, Karan Kumar, hold no direct investment interest in any company mentioned in this article.Oversupply, New Projects to Keep Cobalt Prices Weak for Years from Cobalt Investing News