Glencore Reduces Cobalt Production Amid Market Weakness
In response to the persistently weak cobalt market, Glencore, a leading mining and trading giant, has announced a reduction in its cobalt production targets. The market's sluggishness throughout 2023 has prompted this decision, reflecting broader industry challenges.
According to the latest data, Glencore's cobalt production for 2023 stood at 41,300 tons. The company anticipates a further decrease in production for 2024, estimating outputs to range between 35,000 and 40,000 tons. This adjustment marks a significant downturn, potentially reaching up to a 42% cut compared to the production targets set in December 2023.
The cobalt market experienced a relatively subdued trading atmosphere as the Spring Festival approached. Despite stable supply conditions, the demand side showed signs of weakening, primarily due to the holiday season's logistical constraints. Prices have remained stable, yet the overarching trend for cobalt in 2023 was a decline, attributed to market oversupply.
This oversupply scenario has led to a notable decrease in cobalt prices, with the average spot price of electrolytic cobalt dropping by 31.11% year-over-year as of the end of 2023. The average spot price for the entire year was 271,500 yuan/ton, marking a 36.16% reduction from 2022.
The global cobalt market in 2023 witnessed a supply growth outpacing demand. New production capacities from entities such as Glencore, China Molybdenum, and various Indonesian nickel and cobalt projects contributed to the increased supply. Demand from the alloy and magnet sectors did not meet expectations, leading to a supply surplus and escalating inventory levels.
Further influencing the cobalt market, Huagang Mining, a Chinese construction firm, announced a significant investment in infrastructure projects within the Democratic Republic of Congo (DRC) as part of its Sicomines copper-cobalt joint venture. The investment, amounting to up to $7 billion, aims at national highway construction and other infrastructure projects, showcasing the ongoing international interest in DRC's critical mineral resources.
