Cobalt Industry Begins Shift to London Metal Exchange Pricing

The Financial Times reported that the $2-billion cobalt industry, which for over two decades has used Metal Bulletin price assessments as a benchmark for transactions, is now switching over to the London Metal Exchange contract. Though the move is not expected to happen overnight, it is being described as “inevitable.”

As quoted in the market news:

Freeport-McMoRan, one of the world’s largest miners and refiners of cobalt, last month announced that from the beginning of next year it will no longer use Metal Bulletin prices. ‘We believe there is general acceptance among customers and suppliers to move to LME based pricing for cobalt,’ said David Elliott, senior vice- president at Freeport.

Others are following more quietly. ENRC, another top-three producer, is also planning to introduce an element of LME pricing into its contracts from next year, traders say, selling its cobalt using a weighted average of the LME and MB prices.

‘We’re at a tipping point,’ says Guy Darby, founder of cobalt trading house Darton Commodities and a former chairman of the Minor Metals Trade Association. Between them, Freeport and ENRC account for more than a quarter of global mine production of cobalt.

Click here to read the full Financial Times report.