Price manipulation is nothing new and several countries have participated in the past in such price manipulating activities in one or the other commodity.
Major scenario was noticed among the Chinese investors and traders when iron ore prices moved from $ US 20 a tonne to about $ US 100 from 2007 to 2011. Existence of serious buyers during that course of market majorly impacted the move. Buyers played with the stock, and the respective prices and held down for a span of at least one or two years because they were the biggest buyers. Exactly the same scenario can be noticed with the cobalt and lithium price levels. Spot prices don’t reflect the actual selling value that is being charged by the lithium and cobalt producers. In the period between 2007-2011, prices of iron ore and to some extent coal prices were impacted by the move as buyers were the dictators of the price at that time.
Looking at the long-term price pattern, the future production of Cobalt will fetch approximately 30% more than its spot price if it is sold today.
US President Donald Trump’s move to reduce China’s stranglehold on resources is getting support of many. One such support comes from Mining entrepreneur, Tony Sage, who holds significant stake in many ASX listed companies including European Lithium which owns the Wolfsberg lithium project in Austria, Fe ltd, Cape Lambert and Cauldron Energy, is of the opinion that China is playing significant role in price manipulation of lithium and cobalt in the same way it did with iron ore before the steel making commodity touched the record highs.
China account for almost 85% of the world’s lithium at present. Lithium and cobalt being one of the main ingredients in varied applications has strong demand, because that’s the need of the future development projects. Asian powerhouse which currently dominates in rare earths wants to increase its stake over lithium and other battery metals. Asian powerhouse wants to be the sole controller of the rare earths in future as the growing usage of these in battery storage, EVs, mobile phones and other areas will shape up the new growth story for them.
With the growing demand for the electric vehicles and replication of all old vehicles with the EV’s and strong usage of lithium and cobalt in them, China is the major contributor to Lithium and cobalt and holds a strong position in price manipulation for the same.
If China works on replicating the vehicles with EV than there will be no cobalt and lithium for rest of the world as per the recent statements provided by Mr. Sage. Zhejiang already has 30 per cent of its taxis and 50 per cent of its buses as electric in built. Europe has declared lithium and cobalt as the “critical minerals” and is working on pushing it as a bigger supplier.
It's not the first time China is doing such price manipulation. They have done in the past and continuously working on in at the current scenario. They do such price manipulations virtually in all major minerals with the intention to corner other participants in the market.
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