Glencore to Take 10% Stake in Cobalt Investment Firm Amid Market Slump
Glencore is set to acquire a 10% stake in Cobalt Holdings, a new investment company planning to list on the London Stock Exchange in May, the Financial Times reported.
Cobalt Holdings will operate similarly to commodity investment firms like Yellow Cake, which deals in uranium, by purchasing and holding physical supplies of cobalt.
As part of a long-term agreement, Glencore will sell $200 million worth of cobalt—produced as a by-product of its copper mining operations in the Democratic Republic of Congo (DRC)—to Cobalt Holdings. This move is expected to reduce excess supply in the struggling cobalt market.
Cobalt prices have plummeted from nearly $40 per pound in 2022 to around $11 per pound, largely due to increased supply from China’s CMOC Group, which operates mines in the DRC.
The price collapse prompted the Congolese government to announce a four-month suspension of cobalt exports last month, with potential export quotas to follow.
In response to weak market conditions, Glencore has cut its 2024 cobalt production target to 35,000–40,000 tons—a reduction of up to 42% from its December 2022 projection.
The $200 million cobalt sale to Cobalt Holdings could significantly impact the market, with Fastmarkets analyst Rob Searle predicting a price correction in the coming months. “A supply cut of this magnitude will likely drive prices higher,” he said.
Investors see physical metal holdings as a more secure option than trading derivatives, according to Ryan McIntyre, a managing partner at Sprott, which runs the Sprott Physical Uranium Trust.
He noted that while uranium faces potential future shortages, cobalt’s outlook is complicated by the risk of substitution.
Market analysts warn that ongoing volatility and supply restrictions, including the DRC’s export ban, could discourage automakers from using cobalt in batteries, increasing the likelihood of alternative materials replacing it in electric vehicle production.
