950809

Cobalt prices to

rise near term,

then decline

LONDON: Cobalt prices may again reach $30 a lb in the short term but longer-term it looks very likely that there will be a prolonged period of low prices, said SBC Warburg in its latest International Mining Outlook.

Warburg believes that producer stocks are now very low and that the only significant inventory is held by the U.S. Defense Logistics Agency (DLA), which has around 21,275 tonnes.

The U.S. Department of Defense has decided that this is surplus to requirements and should be sold. It remains to be seen if the U.S. Congress will authorise the disposal and over what period. It has sold 4.0 million lbs (1,800 tonnes) in 1995.

But the possibility of increased sales from the DLA's strategic stockpile pales into insignificance when the number of new mine projects is considered, Warburg said.

Warburg's new mines and expansions table of cobalt by-product showed around 17,000 tonnes per year of output could come on stream between 1996 and 1999.

There are five potential projects in Australia while other sizeable additions could come from Mexico, Tanzania, Uganda, Cuba and Canada, Warburg said.

Also former major producers such as Zaire's Gecamines, Zambia's ZCCM and Russia's Norilsk may be able to raise output.

Warburg reckoned that annual cobalt supplies, including production and stockpile sales, are currently running at around 23,000 tonnes while demand last year was estimated at around 23,750 tonnes.

The price is in the region of $27.50 a lb for 99.8 percent purity metal, having risen from $11 to $30 between November 1993 and January 1995. -Reuter