China aiming to add to its cobalt stockpile - sources

China's National Food and Strategic Reserves Administration has asked the country's major cobalt producers to submit proposals to sell their metal to the state, sources with direct knowledge of the matter told Reuters.

The Chinese government was earlier this year urged by the country's nonferrous metals association to take advantage of a coronavirus-driven slump in commodity prices and stockpile metals, which would also support struggling producers.

Cobalt industry sources estimate China's stockpiler could be holding up to 7,000 tonnes of cobalt metal, typically used to make alloys for the aerospace industry. The metal can also be turned into chemicals for the batteries used in mobile devices and the fast-growing electric vehicle sector.

Jinchuan Group, which owns cobalt mines in China and the Democratic Republic of Congo, had received tender documents from the administration, a source at company said.

Two sources at Chinese battery firm GEM Co Ltd, the parent firm of KLK with cobalt metal approved for delivery against London Metal Exchange contracts, said the company had sent people to Beijing this week to pick up the tender.

Industry sources said bids have to be submitted next week, but that no details of the volume or the price the administration was looking for were available.

A spokesman from the press office of the administration said he didn't know about the tender, but added that any plan would be a "state secret".

Jinchuan Group and GEM did not immediately respond to requests for comment.

China accounts for about half of global consumption of industrial metals.

According to the U.S. Geological Survey, China produced 2,000 tonnes of cobalt last year from local resources. However, government-backed metals research house Antaike said in January China's cobalt processing capacity would exceed 20,000 tonnes this years.

Antaike said in August it had advised Beijing to stockpile cobalt.

China imported 1,987 tonnes of the metal in the first seven months of 2020.

China is aiming to benefit from low prices, the sources said.

Prices, at around $33,000 a tonne on the London Metal Exchange, are up more than 10% since July, but they are still down more than 60% from 10-year highs near $100,000 a tonne in May 2018.

By Min Zhang and Pratima Desai