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Saturday, 29 November 2008

Mine Watch (DR Congo)

FT reports that industrial activity in China has slowed so quickly that demand for cobalt has ground to a halt, spelling bad news for the DRC. Cobalt is mostly mined in Congo’s Katanga province and 64 per cent was processed in China in 2007. Except :

The freezing effect of the end market on the source market was further confirmed last week when Katanga Mining, a copper-cobalt miner in Congo, suspended its cobalt operations. Like Camec, it will meet reduced demand by selling from current stocks.

Mr Groves described Camec’s cobalt mine as only one victim in a global production chain that is seizing up. Companies such as Samsung have cut production of mobile phones in China, he said, causing a “massive drop-off” in orders for phone batteries that use lithium cobalt oxide, in turn halting metal orders from Chinese buyers in Congo.

stockpiles are building up in China and further depressing the price, he said. Trading in cobalt concentrate is opaque but, according to Reuters, the import price in eastern China fell 16 per cent in the week to November 14 and has halved since March. In the week to November 21 it plunged further to about $12 per pound, Metal Bulletin reported.

The cobalt price’s collapse is in line with other industrial metals such as aluminium, zinc, nickel and copper. Miners of these metals daily face crises similar to Camec’s and mothballing mines around the world to save cash as they wait for a price recovery.

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