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The Congo-based Tenke Fungurume copper and cobalt mine, which is the world's second-largest cobalt mine, has suspended all cobalt exports, effective immediately, according to Reuters. A court-appointed administrator requested the stoppage, as the Tenke Fungurume mine is currently in the midst of a dispute between majority-owner CMOC, a Chinese mining concern, and minority-owner Gecamines, a state-owned Congolese miner, over how to market the mine's output. CMOC is denying the administrator access to the mine site. Gecamines has accused CMOC of understating the mine's reserves to reduce royalty payments CMOC pays to Gecamines. Logistics companies were made aware of the stoppage late last Saturday. |
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The CME started cobalt futures in late 2020, but volume and open interest has only picked up in recent months. In fact, open interest has nearly doubled from 2,480 contracts on June 2 to 5,055 contracts on July 15. There is currently no options market, but end-users such as electric vehicle producers can hedge future needs via swaps. Using swaps can help guard against a potential increase in cobalt input costs. Such positions are standard for consumer hedging, but they can result in opportunity costs or cash costs if metal prices decline. Please contact AEGIS for specific strategies that fit your operations. (7/19/2022) |
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Note: Clients with AEGIS Platform access can see this and other research, plus hedge portfolio reporting and tools here. |
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AEGIS Insights |
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07/13/2022: AEGIS Factor Matrices: Most important variables affecting metals prices 07/07/2022: Have Copper Prices Begun to Find a Bottom? 06/23/2022: What is Green Steel Anyways? |
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7/18/2022: Commodity Tracker: 5 charts to watch this week 7/17/2022: Mongolia says Russia-China gas pipeline will break ground in 2024 7/17/2022: CMOC's Congo mine suspends copper and cobalt exports
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Important Disclosure: Indicative prices are provided for information purposes only, and do not represent a commitment from AEGIS Hedging Solutions LLC ("Aegis") to assist any client to transact at those prices, or at any price, in the future. Aegis makes no guarantee to the accuracy or completeness of such information. Aegis and/or its trading principals do not offer a trading program to clients, nor do they propose guiding or directing a commodity interest account for any client based on any such trading program. Certain information in this presentation may constitute forward-looking statements, which can be identified by the use of forward-looking terminology such as “edge,” “advantage,” “opportunity,” “believe” or other variations thereon or comparable terminology. Such statements are not guarantees of future performance or activities.
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