US cancels $500 million cobalt tender in critical minerals blow
The US Defense Department canceled a tender to buy cobalt, in a fresh sign of the challenges facing Western countries trying to bolster domestic supplies of the battery metal.
The Defense Logistics Agency first sought offers in mid-August for up to 7,500 tons of cobalt over the next five years in a contract worth as much as $500 million. It was the US government’s first attempt to acquire the metal since 1990, Bloomberg News previously reported.
The DLA extended the deadline for offers multiple times, from the original due date of Aug. 29 out to Oct. 15. Now, the tender has been dropped, in an apparent setback to US efforts to replenish its critical-mineral reserves after decades of declines.
“There are outstanding issues with the Statement of Work that need resolution before offers may be solicited,” according to a notice published on a US government website on Wednesday. “Upon resolution, solicitation will be re-issued with a new opening and closing date.”
Strengthening supply chains for metals like cobalt has become a political priority for the US and other Western nations, as governments seek to reduce their reliance on China.
Cobalt is used in rechargeable batteries, including in electric vehicles, as well as a range of applications in magnets and military systems, while its alloys are deployed in munitions and jet engines. Beijing dominates cobalt processing and has built up a significant state stockpile.
The US attempt to purchase cobalt came as prices rallied in the wake of export controls introduced by the Democratic Republic of Congo, which accounts for about three-quarters of global output of the metal. The central African nation this week replaced a full ban on shipments with a quota system.
Benchmark prices have doubled since February when the export suspension was imposed. Before that, cobalt dropped below $10 a pound, a level not breached for 21 years, bar a brief dip in late 2015, according to Fastmarkets data.
The DLA was seeking offers for alloy-grade cobalt from three producers: units of Vale SA in Canada, Sumitomo Metal Mining Co. in Japan and Glencore Plc’s Nikkelverk plant in Norway. It asked suppliers to propose fixed prices for the supplies over five years and there was one amendment last month excluding one brand from Vale.
The US government was initially intending to spend a minimum of $2 million and a maximum of $500 million on the contract.
(By Annie Lee and William Clowes)
No comments:
Post a Comment