For the Instructor

These student materials complement the Humans' Dependence on Earth's Mineral Resources Instructor Materials. If you would like your students to have access to the student materials, we suggest you either point them at the Student Version which omits the framing pages with information designed for faculty (and this box). Or you can download these pages in several formats that you can include in your course website or local Learning Managment System. Learn more about using, modifying, and sharing InTeGrate teaching materials.

Initial Publication Date: October 16, 2014

Cobalt: How Disruptions in Supply Affect the Price of a Mineral Resource

The United States is the world's largest consumer of cobalt, but we do not mine any cobalt in this country (we do produce some cobalt by recycling). Cobalt is considered a critical metal and is included in the National Defense Stockpile, "to ensure an adequate supply for military, industrial, and essential civilian needs during a national emergency." (USGS)

The graph of cobalt price shows a huge spike in the 1970s (in 1998 dollars). The price of cobalt soared primarily because of a supply shortage. In the 1970s, most cobalt was produced in Zaire (now the Democratic Republic of Congo; Congo is again the main world producer of cobalt). Cobalt is produced as a byproduct of copper mining in the region of Shaba. Mining was interrupted in 1977 when separatists invaded Shaba and this supply disruption caused the spike in global cobalt prices (and, sadly, the uprising also killed more than 800 people).

Before the price of cobalt spiked in the late 1970s, samarium-cobalt magnets were used to make sound in speakers and phones, and used in electric motors. But increasing cobalt prices made these magnets less attractive. While researching new (and ideally cheaper) technology, engineers at General Motors and Sumitomo Special Metals invented neodymium magnets, made of neodynium (a rare-earth element), iron, and boron. These are now the main magnet used for electronics and motor technology. The supply-driven price hike led to development of substitute materials (and new technology), as shown by highlighted sections of the concept map.

In the late 1970s, the president of Zaire, Mobuto Sese Seko, nationalized the mining industry. The state-run company Gecamines was a huge cobalt (and copper) producer but had allowed their equipment to age. In the 1980s, the company requested, and was granted, loans from the World Bank, the African Development Bank, and the European Community. But before this money could be spent on updated mining and processing equipment, the loans were withdrawn when the lending agencies found that Gecamines revenue was being used to pay soldiers and build railroads.

Even as the mining infrastructure crumbled, the industry still provided more than 75% of the country's wealth. However, in the 1980s, the international community withdrew support of the Mobuto government. The government could not pay the promised salaries to its soldiers, and they revolted in 1991. Four days of protests and riots centered at the Gecamines mining operations shut the mines. Striking workers burned mining equipment (even destroying newer, state-of-the-art equipment at one mine); more than 30 people died.

In 1992, the World Bank completely pulled out of Zaire. Also, Katangans (members of the main ethnic group) rose up against people from Kasai, an ethnic minority who had, for generations, managed the area's mines. The mines were without equipment and experienced personnel.

The Unit 2 concept map mentions mining cost as a factor, but not closing of mines due to government strife. Figure 2 shows the supply (production) disruption in Zaire. Needless to say, the mine closure resulted in a decrease in global supply and a corresponding increase in cobalt's price that you can see in Figure 1 (although not as severe as the 1970s price jump). The mine closures did more than just affect the global economy; citizens of Zaire were decimated.

In 1994, the mines still employed 2000 of its 3000 employees, but it had been months since these workers received a paycheck. The country's second largest city built near these mines was suffering; no gasoline had been delivered to gas stations in months, and a once-thriving city was in poverty's grasp.

While the mines were closed, people visited the slag piles, digging through the potentially toxic debris to find chunks of metal they could sell.

In the new millennium, the mining industry in Congo has been recovering. Several private companies have purchased the assets of Gecamines and have invested in new mining and processing equipment to pump water out of the abandoned pits and to hire new workers. For example, the Katanga Company has taken over some of the sites. You can see the mining properties at http://www.katangamining.com/operations/key-assets.

Resources

USGS Minerals Information: Cobalt.

USGS Statistical Compendium: Cobalt.

USGS Historical Statistics for Mineral and Mineral Commodities in the United States: Cobalt.

Noble, Kenneth B. February 21, 1994. "Zaire's Rich Mines Are Abandoned to Scavengers." New York Times. Available online at http://www.nytimes.com/1994/02/21/world/zaire-s-rich-mines-are-abandoned-to-scavengers.html.

Perlez, Jane. October 28, 1991. "Violence Kills Dozens in Zaire Mining Town." New York Times. Available online at http://www.nytimes.com/1991/10/28/world/violence-kills-dozens-in-zaire-mining-town.html.