Jervois Global Announces Major Cost-Cutting Measures Amid Cobalt Price Plunge
Jervois Global, an Australian mining company, is implementing significant cost-reduction strategies, including job cuts, in reaction to a substantial drop in cobalt prices, which the company attributes to an oversupply from China. The firm has reduced or transitioned to part-time roles for 30% of its senior corporate management and decreased the fees for non-executive directors by the same margin. Additionally, about 5% of the workforce at its Finland project has been dismissed.
The decline in cobalt prices by nearly two-thirds over the last two years is largely due to increased production from the Democratic Republic of Congo and Indonesia and a deceleration in demand growth. China, which processed 80% of the global cobalt supply last year, as reported by Darton Commodities, a trading house specializing in cobalt, has been a significant factor in this trend.
Jervois Global had previously suspended its project in Idaho, which would have marked the inauguration of the first new cobalt mine in the US in several decades. This move underscores the difficulties faced by the Biden administration in reducing China's dominance over the supply chains of metals crucial for the energy transition.
The recent austerity measures by Jervois Global are a response to the "adverse cobalt market conditions caused by Chinese overproduction and its impact on pricing," according to the company. Jervois remains committed to establishing a responsibly sourced supply chain of critical minerals from the West.
Following these announcements, the company's stock experienced a downturn, falling as much as 17% in Sydney trading. From a peak of 96.29 Australian cents (about 63 US cents) in April 2022, the shares have dropped to less than 3 Australian cents (approximately 2 US cents) as of Thursday morning, local time.
