EDITORIAL PAGE — What’s ahead for cobalt?

The recent increase in cobalt prices to more than US$26 per lb. is good news for producers, some of whom have already responded to current tightness by expanding production. And further down the road, a number of new nickel projects hope to benefit from the contribution to the bottom line of valuable byproduct cobalt.

When the good times roll, even exploration projects get a boost, including a new nickel-copper-cobalt discovery near Labrador’s coast. The project is still in its early stages, with much work to be done to determine its ultimate significance.

Even so, some back-of-the-envelope number-crunching is being done to guesstimate the in situ value of the mineralized zone based on the assay results and current metal prices. It’s an exercise few in the mining business can resist, and is relatively harmless so long as one keeps in mind that metal prices (and geological data) are subject to change without notice. The results of this particular exercise show that cobalt will be of more economic interest than copper and will be second only to nickel. Whether this will still be true five or ten years down the road, remains to be seen. Cobalt markets have been volatile of late, primarily because of crises in Zaire, Zambia and Russia. According to the U.S. Bureau of Mines and other sources, the amount of cobalt being mined has been steadily declining. It is estimated that only 17,400 tonnes were mined in 1993, a decline of about two-thirds from 1986. The largest production declines were from Zaire (more than 90%), where cobalt is co-produced with copper.

But this is only part of the story. The statistics also show that the volume of refined cobalt in 1993 was greater than the mined output, which suggests that some previously mined cobalt is coming into play.

Analysts note, too, that declines in production by traditional suppliers have been offset by increases from other producers, such as Sherritt and Falconbridge, to name a few.

According to Cobalt Facts, published by the Cobalt Development Institute, refining of secondary and recovered cobalt (scrap) grew rapidly in 1993, with “as much as 12-14% of primary production of metal/salts and powder cents arising] from these materials.”

And now that the Cold War has ended, the U.S. government has affected markets by auctioning off some of its stockpiled cobalt. More sales are planned for next year.

The former Soviet Union also changed the dynamics of the cobalt industry. Once a net importer, it exported an estimated 3,100 tonnes in 1993, which does not include Cuban-produced concentrates.

Current prices for both nickel and cobalt are prompting producers to take a serious look at developing new projects around the world. Inco, for example, is eying the potential of its Goro property in New Caledonia, described as a low-cost source of nickel and cobalt, and “one of the largest reserves in the world.” The company is reporting “excellent” progress on a hydrometallurgical process for this project.

The demand side of the equation is less clear. However, the consensus of speakers at the Cobalt ’94 conference in the U.S. was that demand and supply are close to being in balance. Most predict the price of the metal will soon begin easing off to the US$15-20-per-lb. range, which is not bad when compared with the mid-1980s when prices fell to US$6 per lb.