Fortune Minerals : COBALT NEWS

S&P Global Platts - September 14, 2021

A military coup in West Africa has underscored the potential benefits of stockpiling critical and strategic metals essential for the energy ...

extraction. Meanwhile, in the Democratic Republic of the Congo, human rights abuses are making cobalt mining look toxic for investors that

A military coup in West Africa has underscored the potential benefits of stockpiling critical and strategic metals essential for the energy transition…The detention of Guinea's president, Alpha Condé, saw the alumina ex-works China price assessed by S&P Global Platts hit $480.40/mt on Sept. 6, the highest in almost three years…Unlike oil markets, the stockpiling of metals and ores-such as alumina bauxite, lithium, and copper-is opaque. There is no equivalent intergovernmental watchdog to the International Energy Agency, which was established in 1974 to protect energy markets from supply shocks caused by security threats, wars and political turmoil. The IEA requires its 30 member nations to hold emergency stocks of oil to cover at least 90 days of imports…The Paris-based agency is now urging countries to establish, or expand, strategic reserves of metals used in the energy transition to ensure bottlenecks do not slow progress in reducing carbon dioxide emissions, or cause price spikes. Some countries have already built up their own stockpiles and are using them to intervene in an overheating market. However, reporting of stockpile levels is inconsistent and, unlike in the oil industry, there is no coordinated or transparent approach to providing data…'Security of supply tensions are directionally shifting toward metals which are crucial to the energy transition, national defense industries, and other supply chains,' said Paul Sheldon, chief geopolitical adviser at S&P Global Platts Analytics. 'In the years ahead, the lack of internationally coordinated strategic reserves, combined with some geopolitically unstable sources of supply, portend a high likelihood of volatile prices.'…China-the world's largest importer of raw materials-has been much more aggressive. Beijing has stashed away its own horde of essential metals, ores and other crucial industrial commodities used in the energy transition…In Africa, Beijing has gone much further than simply building up its commodity stockpiles. China has invested billions directly through its Belt and Road Initiative to forge deeper economic and security ties with the continent's biggest producers of critical and strategic metals used in the energy transition…Meanwhile, in the Democratic Republic of the Congo, human rights abuses are making cobalt mining look toxic for investors that are increasingly sensitive to environmental, social and corporate governance concerns…Of course, Guinea's new military leaders have little to gain from shutting down the country's mines. However, the episode is a reminder of how building strategic reserves can help the energy transition avoid uncertainties caused by geopolitical supply disruptions and price volatility.