BENGALURU, Jan 26 (Reuters) - Prices of cobalt metal have climbed to their highest since July 2008 as worries about shortages were reinforced by output disruptions at the Ambatovy mine in Madagascar this month, European traders said.
Cobalt metal is used in superalloys to make jet engines, while cobalt chemicals are a key component in rechargeable lithium-ion batteries used to power mobile devices and electric vehicles.
Cobalt metal COB-CATH-LON is currently quoted around $37.25 per lb in Europe, having more than doubled from the same period last year. It has gained more than 15 percent this month.
Production at the Ambatovy mine, a joint venture between Japan’s Sumitomo Corp and partners Sherritt International Corp and Korea Resources Corp, stopped on Jan. 4 due to Cyclone Ava.
Sumitomo on Jan. 11 said part of the facility was damaged by the cyclone and repairs were expected to be completed at the end of January, with production closed during that time.
Sherritt this month said it expected cobalt production at Ambatovy to rise to 3,900-4,200 tonnes this year from 3,053 tonnes in 2017.
“The market is worried about force majeure at Ambatovy,” a London-based trader said.
A Stockholm-based trader said plans by top producer, the Democratic Republic of Congo, to raise royalties for cobalt also helped the rally this month pick up momentum.
Roughly 65 percent of the world’s cobalt, estimated at around 100,000 tonnes last year, comes from Congo.
Lower supplies from the DRC last year and rising demand were also behind the tighter market last year.
A major reason behind the cobalt price surge since December 2015, when the price was below $10 a lb, is the fast-growing market for electric vehicles.
Governments and auto makers around the world are aggressively promoting electric vehicles to cut emissions from cars fuelled by diesel and petrol-powered engines. (Reporting by Karen Rodrigues and Vijaykumar Vedala in Bengaluru; editing by Pratima Desai)