Thursday, May 15, 2008

Chambishi loses 220T of cobalt in April-May

by Alex Harrison

Chambishi expects to lose around 220 tonnes of cobalt production as a result of problems with its furnace, which began on April 23 when a change in operating procedures took place, a source familiar with the operations told MB.

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Chambishi expects to lose around 220 tonnes of cobalt production as a result of problems with its furnace, which began on April 23 when a change in operating procedures took place, a source familiar with the operations told MB.

The Zambian cobalt producer's furnace was stopped and cleaned out after further problems at the end of April, the source said.

The company lost 40 tonnes of production in April as a result of what happened and has lost 140 tonnes so far in May, he calculated.

The company expects to restart the furnace on Thursday, he said.

If things go to plan Chambishi will be producing at its normal rate of around 10 tpd by the end of May.

Till then, though, it will only be producing at 4 tpd after the furnace is restarted.

"They wouldn't declare force majeure for something like this because they want to keep supplying their long-term customers," the source said.

Chambishi may be planning a deal with another producer to secure the extra material it needs, another market source speculated.

For the moment it is unclear what the effect will be on prices in what is already a tight market.

One consumer told MB: "It's already priced in. They've had a few problems at Chambishi in recent times."

Still, one trader said he was surprised by the lack of effect that Chambishi's problems are having.

"Consumers aren't concerned - and they really should be," he said. "If they do declare force majeure, maybe that's when it'll affect the market."

As a producer Chambishi has a perfect right to declare force majeure to some of its customers in circumstances such as these, he said.

"Perhaps there's been a bullish overload," he said.

"It's a genuinely bullish bit of news, but nobody's worried out. I'm bemused," he added.

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Chambishi loses 220T of cobalt in April-May

Chambishi expects to lose around 220 tonnes of cobalt production as a result of problems with its furnace, which began on April 23 when a change in operating procedures took place, a source familiar with the operations told MB.

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