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To: LoneClone who wrote (41898)	8/20/2009 6:53:20 PM
From: LoneClone	1 Recommendation Read Replies (1) \| Respond to of 193918

INTERVIEW-Sherritt projects cobalt deficit next year by Reuters News on 20 August 2009, 08:48 AM communities.thomsonreuters.com * 1,000-3,000 cobalt market deficit seen next year * Demand spike, lack of new production project to boost LONDON, Aug 19 (Reuters) - The global market for battery material cobalt will slide into a deficit next year, as rising demand and stalled production projects boost prices, Sherritt International told Reuters. Martin Vydra, managing director at Toronto-based Sherritt International, predicts a cobalt deficit of between 1,000-3,000 tonnes in 2010. "I believe that pricing is starting to now track supply and demand and that there is more room to go up," Vydra told Reuters in an interview on Wednesday. Refined cobalt consumption in 2008 was estimated about 60,000 tonnes, while total cobalt supply was at about 55,878 tonnes in 2008, according to the Cobalt Development Institute. Sherritt International, whose main assets are in Cuba, Canada and Madagascar, sells cobalt to offset nickel mining costs. Trading on the Toronto stock exchange, Sherritt produced an all-time high of 3,573 tonnes of cobalt in 2007, 3,428 tonnes in 2008 and is looking to top last year's figure in 2009. "We are the lowest cost producer," said Vydra. "We are also the last supplier to be dropped by a consumer when they are cutting back. "We do hear from consumers idling production or being careful with inventories in the past (but they) are now more confident that they can build inventories because their order books are full." He added that the rechargeable battery and super alloy industries were showing real signs of recovery, with more enquiries coming through from spot customers during the second quarter. "When cobalt was $11/$12, you had a lot of buyers out there sitting on the fence but didn't want to jump in unless they knew it had hit the bottom," Vydra said. Prices for high-grade 99.8 cobalt, not currently traded on an exchange in London, fell as low as $12 a lb in December, down from levels above $52 a lb in March last year. A by-product of both copper or nickel mining, cobalt is used to make aero engines and batteries for hybrid cars and is currently traded at about $19.25 a lb. Vydra also said that Sherritt's Ambatovy nickel project in Madagascar, which is currently under construction and expected to be fully operational at the end of in 2010, will bring an additional 5,600 tonnes per year of cobalt to the market. "We will be probably the largest cobalt producer on the market," Vydra added. On the launch of cobalt contracts on the London Metal Exchange due to go ahead in February 2010, Vydra said it would offer transparent, daily pricing. Adopting a cautious approach, he added that he was looking for more details on the grade specifications for the cobalt contracts. "We are very happy to see the LME to bring in cobalt contracts but are waiting to see how the pricing of LME cobalt will track the true market," he said. "Cautious optimism is a very good term." (Reporting by Michael Taylor; editing by Keiron Henderson)