By Tom Manzella | 12 June 2017
Cobalt, the increasingly well-known base metal and byproduct of copper and nickel mines, is continuing to gain relevance given its use in conjunction with lithium batteries. The cobalt cash price on the London Metal Exchange has risen more than 70% since January 1 and is trading around US$25/lb. The price surge means copper and nickel operations where cobalt is present can benefit greatly from the higher cash flow.
The Mine Economics data set, an offering of S&P Global Market Intelligence, provides users with standardized mine-level cost, production and cash flow analysis. Using Mine Economics' flex model, three price assumptions were entered to study the effect of cobalt prices on copper and nickel operations — a "constant" price of US$11.68/lb, which represents the 2016 average annual cobalt price, a "consensus" price of US$18.72/lb, and the current price of US$25/lb. The price deck for all other commodities remained at "constant" levels for 2016 to isolate cobalt's effect on cash flow. The Mine Economics data covers about 67% of global recovered cobalt production.
This report examines the hypothetical impact of varying cobalt price on the 2017 pretax cash flow scenarios of the top producers and their operating mines -
PJSC Norilsk Nickel Co, Glencore Plc, China Molybdenum Co. Ltd., Gecamines SARL and Vale SA.
To review the analysis, please complete the form on the right.
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