Global Cobalt Production Capacity Expected to Be Positive in 2021

Market analyst Roskill forecasts that the total sustaining production cost of cobalt will fall by around 2% year-on-year in 2021, from $ 23,085 /t to $ 22,600t.

In a recent report, Roskill explains that as a result of this prediction, he estimates that over 98% of cobalt production capacity will be cash positive on an AISC basis, based on a cobalt price of around $ 39,700 /t./ t.

In the market analyst’s view, all cost centers, except processing and site G&A, will decline on an industry-wide average aggregate basis in 2021. The combined remainder is expected to decline by $ 1,329 /t, but this will be offset by an increase of $ 859 /t in site G&A and processing costs, resulting in an overall estimated AISC for 2021 of $ 22,600 /t cobalt.

“The Democratic Republic of Congo accounts for more than 70% of the supply of mined cobalt and any movement in cost structures will have a significant impact on overall cobalt cost trends,” the document reads.

“Since 2018, miners have renegotiated their intermediate transport costs from the country to South Africa. The reduction in transport costs has resulted in a fall in the costs of realization (transport), which will be maintained in 2021 ″.

Roskill notes that, after large investments in recent years, major operations in the Democratic Republic of the Congo have seen a decline in supporting capital.

As an example, he presents the case of the Deziwa operation, a joint venture between the state-owned Gécamines and China Nonferrous Metal Mining Company that aims to produce 80,000 tons of copper and 8,000 tons of cobalt per year. The project came online in 2020 with low maintenance costs on a unit cobalt basis, and is now expected to reduce the industry’s overall maintenance costs as well.

Similarly, Roskill experts believe that improving operational efficiency at major producers such as Katanga Mining’s Kamoto mine and China Molybdenum’s Tenke Fungurume operation in Congo, and Sherritt International and General Nickel Company’s Moa mine in Cuba will reduce extraction costs.

Despite this positive outlook, the analyst predicts higher plant costs, which would increase processing costs, at specific operations such as Tenke Funkurume, Vale’s Voisey’s Bay mine in Canada and the Goro mine in New Caledonia.

“The increases are due to a variety of mine-specific reasons,” the report reads.

Source: World Energy Trade.