Western miners push for higher metals prices to wa Reuters - July 22, 2024
Artisanal miners work at the Tilwizembe, a former industrial copper-cobalt mine, outside of Kolwezi, the capital city of Lualaba Province ...
Artisanal miners work at the Tilwizembe, a former industrial copper-cobalt mine, outside of Kolwezi, the capital city of Lualaba Province ...
The only U.S. cobalt mine sits fallow in the northern Idaho woods, a mothballed hunk of steel and dirt that is too expensive for its owner to operate because Chinese rivals have flooded global markets with cheap supplies of the bluish metal used in electric vehicle batteries and electronics…Jervois Global , which dug the mine into the side of a nearly 8,000-foot (2,400-meter) mountain, watched helplessly last year as cobalt prices plunged after China's CMOC Group opened the Kisanfu mine in the Democratic Republic of Congo, pushing global production of the metal to an all-time high…"We were straightforward with our staff and told them: 'This is all about the price of cobalt,'" site manager Matthew Lengerich told Reuters during a visit to the facility. Jervois says cobalt prices need to reach at least $20 per pound for the site to open. But prices sat near $12.17 in July…A similar quandary faces BHP , Albemarle and other Western mining companies trying to compete with metals produced by Chinese-linked companies, some of which use coal-generated electricity, child labor or other practices not meeting the standards set by many governments and manufacturers…Western miners say their competitors have inherent cost advantages that enable rapid production expansions even as prices for cobalt, lithium and nickel have plunged more than a third in the past 18 months. Operational costs for many of these Western companies have, as a result, been exceeding what market prices will cover…That has fueled growing calls from some policymakers and miners, including Jervois and Albemarle, for a two-tier pricing system with a premium for sustainably produced metals, according to interviews with more than three dozen traders, investors, executives, purchasing agents, and pricing agencies…The plan is to charge more for a metal that is produced sustainably, whether that is through direct transactions or via multiple prices for a metal listed through futures exchanges, depending on production methods. For example, there would be one price for standard nickel and another for green nickel. "Western miners simply can't compete with China, and China has shown the willingness to drive market prices way, way down," said Morgan Bazilian, director of the Payne Institute for Public Policy at the Colorado School of Mines…Industry leaders have pushed for two pricing structures for several years, but the call for change started gaining more attention from investors, policymakers and customers last fall as Western governments grew more concerned about Chinese competition…Customers for now do not face a penalty if they do not source sustainable metals, but they increasingly face a reputational risk…Since January, world leaders have taken a range of steps to offset China's market control…President Joe Biden imposed tariffs in May on critical minerals produced in China, saying "(metals) prices are unfairly low because Chinese companies don't need to worry about a profit."…Jim Chalmers, Australia's treasurer, in February said governments should consider support for "a differentiated international trading market for resources produced to higher ESG standards."…Chrystia Freeland, Canada's deputy prime minister, in April said Ottawa would fight the dumping of critical minerals by China, Indonesia and others…Multiple U.S. senators from both parties have said they are considering legislation to offer price insurance for metals, similar to a government insurance program for crops, according to Senate aides. Such a move would guarantee miners a price for their metals, regardless of market conditions…General Motors , the largest U.S. automaker, believes critical minerals should be produced sustainably but does not want to pay a premium out of concern that it will be unable to compete with Chinese rivals, according to a source directly involved in the company's minerals procurement…"You will not be able to guarantee by any stretch of the imagination a non-China supply of certain metals unless you're willing to pay some degree of a premium for that product," said Benchmark's Daniel Fletcher-Manuel.