Cobalt Holdings bets the battery metal’s fortunes have turned
LONDON, May 29 (Reuters) – The price of cobalt has fallen so far over the last couple of years that even Congo’s artisanal miners have given up on the battery metal.
They have been swept aside by a wave of production from the Democratic Republic of Congo’s (DRC) formal sector and a secondary flood of metal from Indonesia.
The market was over-supplied for the third consecutive year in 2024 even though global demand exceeded 200,000 metric tons for the first time.
Metals investor Cobalt Holdings is betting that the worst is over.
The company is aiming to raise $230 million from an initial public offering in London the majority of which it will use to buy 6,000 tons of physical cobalt from Glencore (GLEN.L)
Chief Executive Jake Greenberg believes the purchase from Glencore, the first of several, will be “at or near a low point in the cycle”, according to the company’s registration filing.
Greenberg helped launch Yellow Cake (YCA.L), which offers investors a physical uranium play, and Cobalt Holdings is a similar vehicle for punters wanting to ride the cobalt cycle.
It’s likely to be a bumpy ride and the longer-term bull thesis hinges both on whether the Congo, and to a lesser extent Indonesia, can restrain supply and on whether cobalt can maintain its position as a critical new energy input.
FINDING THE FLOOR
The DRC government’s imposition of a four-month export ban in February is a positive sign that the world’s largest cobalt producer has woken up to the fact it is producing too much.
Cobalt has a history of boom-and-bust pricing as super-strong rallies such as those in 2018 and 2022 generated an artisanal supply response.
Not this time.
Congo’s informal sector saw output drop to a historic low last year, both in absolute and relative terms, according to analysts at Benchmark Mineral Intelligence (BMI).
Rather, it was China’s CMOC Group (603993.SS), which caused the supply shock, more than doubling production to 114,000 tons, above both guidance and assumed nameplate capacity at its TFM and KFM mines in the DRC.
The output surge continues unabated. The company reported first-quarter output of 30,414 tons, up 21% year-on-year.
That material is stuck for now as the government decides what it will do when the export ban expires in June.
But any decision “will inevitably imply a strict limitation of exports in whole or in part until market balance is reached with regard to the supply and demand of cobalt”, according to Patrick Luabeya, head of the government’s strategic metals authority.
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Cobalt Holdings bets the battery metal’s fortunes have turned, source
