Cobalt Stays at High Price and Net Profits of 4 Major Cobalt Producers in China Doubled in H1 of 2018

Cobalt Stays at High Price and Net Profits of 4 Major Cobalt Producers in China Doubled in H1 of 2018

As cobalt stayed at high price, net profits of 4 major cobalt producers in China realized significant growth in H1 of 2018.

According to the semiannual report published on the evening of August 28, 2018 by Hanrui Cobalt, the Company realized operating revenue of RMB 1.5 billion (with YoY increase of 204.42%) and net profit of RMB 529 million (with YoY increase of 288.97%) in H1 of 2018. Hanrui Cobalt has attributed the business growth to the increase of cobalt product sales revenue and expansion of industry chain.

Compared with the previous year, the sales revenues of cobalt powder, cobalt concentrate, cobalt salt product and cathode copper realized YoY increase of 82.3%, 200%, 1000% and 76.62%.

In order to expand the upstream cobalt ore resource, the 5,000 t/a metal cobalt hydroxide production line of Hanrui Cobalt located in D.R. Congo has been put into production in 2017 and realized profit; the 3,000 t/a metal cobalt powder production line and competence center projects are under civil construction; 20,000 t/a cathode copper and 5,000 t/a cobalt hydroxide investment projects in Kolwezi are at the stage of equipment purchase.

According to the data published by 100ppi, in the first quarter of 2018, the cobalt price experienced continuous rise, with the price of MB low-grade metal cobalt increased from the USD 35/lb. at the beginning of the year to USD 43.7/lb. at the end of April, and gradually fell. By the end of June, the price of MB low-grade metal cobalt dropped to USD 39.7/lb., still higher on a YoY basis.

As of June 30th, the price of metal cobalt was RMB 528,500/ton, with 12.57% decline compared with that at the beginning of June and YoY increase of 32.01%.

According to China Molybdenum Co., Ltd. (CMOC), the cobalt price rise is based on the favorable expectation on stable requirements by the battery sector, which is relevant to the optimistic expectation on the electric vehicle industry. At the end of the second quarter, the cobalt price saw some decline after nearly rise over a year and a half, mainly due to the approaching consumption off season in Europe, slow cobalt product import and change in vehicle subsidy policy in China.

In H1 of 2018, CMOC realized operating revenue of RMB 14.06 billion (with YoY increase of 20.63%) and net profit of RMB 3.123 billion (with YoY increase of 273.89%). Specifically, the copper-cobalt sector realized operating revenue of RMB 8.466 billion (with YoY increase of 25.22%), representing the fastest-growing sector except for molybdenum-cobalt sector.

Thanks to cobalt price rise, Huayou Cobalt realized operating revenue of RMB 6.783 billion (with YoY increase of 79%) and net profit of RMB 1.508 billion (with YoY increase of 123%).

Specifically, cobalt business represents over 70% of the total operating revenue in H1, reaching RMB 4.786 billion, with YoY increase of 72.6%, and realized gross profit of RMB 2.291 billion, with YoY increase of 100%.

According to the report published by Huayou Cobalt, it produced approx. 10700-ton cobalt products in H1 of 2018, with YoY increase of 4%.

Besides, Huayou Cobalt is accelerating the expansion of upstream and downstream industry chain. In terms of the upstream industry, its PE527 copper-cobalt concentrate project (including 3100 t/a metal cobalt) has reached design capacity, MIKAS 4000 t/a cobalt hydroxide project (including 1200 t/a metal cobalt) has been put into pilot production, and MIKAS Phase II 9000 t/a cobalt hydroxide project (including 3600 t/a metal cobalt) has started the construction.

In terms of ternary material production, in H1 of 2018, Huayou Cobalt independently produced 6988-ton ternary precursors (with YoY increase of 90%) and sold 6383-ton ternary precursors (with YoY increase of 225%).

In H1 of 2018, Huayou Cobalt completed the signing of 4 joint venture project agreements with POSCO and LG Chem, and all the JVs have completed the business registration.

According to Huayou Cobalt, the partnership with POSCO and LG Chem will effectively integrate their respective advantages in technology and market channel in terms of ternary precursors, ternary anode materials and vehicle lithium-ion power batteries, which will lay a foundation for Huayou Cobalt to integrate with the global new energy vehicle supply chain system and expand the international lithium battery new energy material market.

According to Jinchuan International, another major cobalt resource supplier, it realized operating revenue of USD 825 million (with YoY increase of 238%) and net profit of USD 61.02 million (with YoY increase of 684%).

Its operating revenue was mainly attributed to the increased revenue of mining business. In H1 of 2018, the price of copper and cobalt, its major products, and sales realized growth.

In H1 of 2018, the average price of cobalt of Jinchuan International increased to approx. USD 74200/ton, with YoY increase of 118%, and the sales increased by 27%.