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Western cobalt producers have, for many years, anticipated a trend towards metal consumption, instead of concentrate or hydroxide, by Chinese cobalt-salt makers, but this has yet to take place on any large scale.
Some Chinese market participants have increasingly come to consider this possibility, however, after environment watchdogs in several provinces started to take serious action against pollution caused by both non-ferrous and ferrous metals refineries this year.
“Given that Beijing is paying more attention to environmental protection, I believe that the pollution [produced] during the refining of cobalt intermediates will become a large concern in the future,” Aaron Cao, md of Shanghai Greatpower Industry Co Ltd, said during a recent interview with Metal Bulletin.
“Cobalt metal by comparison is the best alternative,” he added.
Around 99-100% of the waste yielded from the tolling process of cobalt metal can be recycled, whereas waste from the processing of cobalt concentrates or intermediates cannot be recycled easily, meaning it contributes to pollution in the local environment, according to Cao.
A crackdown in the form of increased inspections has already taken place on aluminium smelters, stainless steel mills and ferro-alloys plants, as Metal Bulletin previously reported.
There have not yet been serious environmental crackdowns on cobalt refineries compared with those on ferrous smelters in China, however.
But local environment watchdogs have become less tolerant of pollution caused by cobalt-salt refineries and have been carrying out more and stricter inspections on emissions.
Faced with rising costs to meet stricter environmental protection standards, several cobalt tetroxide refineries in China have already withdrawn from the market since late 2015.
As a result, over 10,000 tonnes of tetroxide capacity were suspended in 2016, according to a source from a cobalt refinery in China.
Furthermore, local environmental watchdogs have set restrictions on emissions.
Cobalt-salt refineries now must apply for an emission permit from local environment protection authorities, without which they are not able to begin operating, Metal Bulletin learned from the market.
Some Chinese sources do not anticipate an imminent shift in feed usage. As one source from the market pointed out, cobalt refineries in China that have survived so far have coped well under current environmental protection conditions. They acknowledge, though, that they need to think about change in case the local regulators raise standards.
“I estimate that in five to ten years, a much stricter standard will be made and by that time, refineries will either choose to step out of the market or choose cobalt metal as feed to make refining cleaner,” one source said.
Environmental issues are not alone in driving a potential shift in feed usage, according to sources in the market.
“Our neighbours, such as Japan and Taiwan, all use cobalt metal instead of concentrates or intermediates to toll downstream products because only cobalt metal is qualified for producing value-added products there,” a trader from northern China said.
“Besides, cobalt metal is favourable from a logistics perspective as it is easier to transport and needs less storage space compared with cobalt intermediates which also face controls on dangerous goods,” the same trader added.
Therefore, an increasing number of market participants see more value in cobalt metal. Some also expect investment in refining capacity close to mine sites.
“I see a trend in three years that people will start to establish cobalt metal refining facilities near cobalt mining areas and export cobalt metal instead of intermediates,” Cao predicted.
However, some cobalt salt refineries were sceptical of a total move away from traditional feed sources. They argue that a cost comparison makes this move impossible at present.
“If you do a simple calculation on cost, you will see it isn’t going to happen,” an executive from a large cobalt refinery in China said.
Batteries are the major driver of cobalt consumption and they are quite sensitive to cost, as one trader pointed out.
“The complete replacement of cobalt intermediates by cobalt metal as the raw materials for tolling is quite hard to achieve under current conditions,” another source from a trading company said.
“It requires both investment and techniques to refine ores into metal, and with existing facilities and technologies in DRC and Zambia, it is impossible for them to export cobalt metal directly,” he added.
Nevertheless, many sources have reached a consensus that from the perspective of environmental protection and commodity value, it is inevitable that cobalt metal will become a mainstream feed for cobalt downstream. The question is how long it will take.