Zambia’s proposed border lockdown could have big impact on cobalt deliveries from DRC [UPDATED]

The Ministry of Transport & Communication in Zambia has recommended the all cross-border cargo shipments be suspended to curb the spread of the novel coronavirus (2019-nCoV), according to a letter seen by Fastmarkets.

In the letter, sent on Tuesday March 24, the permanent secretary of the country’s transport authority, Misheck Lungu, suggests that the government suspend all cross-border traffic from March 27, with the exception of essential commodities such as food, fuel and health-related products.

Lungu also suggests that cross-border passenger movements be curtailed and that selected airports be closed to reduce the number of people using local public transportation services.

The recommendations were made after 12 coronavirus infections were confirmed in the country in south-central Africa.

Zambian president Dr. Edgar Chagwa Lungu did not respond to the recommendations in his statement on Wednesday March 25, though he stressed that the government has devised a phased strategy, and that essential businesses dealing in goods and services would be kept running.

But should the recommendations be accepted by the Zambian government, the lockdown of borders to non-essential cargoes will have a big impact on cobalt supplies from the Democratic Republic of the Congo (DRC), because Zambia provides a critical path into South Africa where cobalt hydroxide from the DRC is exported via the port city of Durban.

Tanzania could be used as an alternative, however, with material being shipped out of Dar es Salaam, sources said.

Earlier this week, the concerns over the cobalt supply chain were heightened by a two-day lockdown in the DRC’s Haut Katanga province and a 21-day lockdown in South Africa, where bulk terminals will be closed to minerals shipments from midnight on March 26.

However, Chinese cobalt consumers broadly downplayed any upward pressure the current disruption to transportation in Africa might have on cobalt raw materials prices in the short term due to faltering downstream demand from both the electric vehicle (EV) and consumer electronics sectors after the global impact of the 2019-nCoV pandemic became clearer this week.

Fastmarkets’ cobalt hydroxide payable indicator, cif China, stood at 65-68% of Fastmarkets standard-grade cobalt price (low-end) on Wednesday March 18, down from 67-69.5% at the end of last month.

“The coronavirus hit both supply and demand, but the impact on the demand side is more formidable for now,” a consumer told Fastmarkets.

Editor’s note: This story was updated at 14:15 on March 25 to include the latest coronavirus cases in Zambia and a statement by the country’s president.