China’s Strategic Plan to Enhance Cobalt and Copper Reserves

China plans to enhance its strategic reserves of cobalt, copper, and other essential metals this year to bolster supply security amid rising energy-transition demands and geopolitical tensions. The National Development & Reform Commission indicated ambitions for faster stockpiling, while existing pressures from global trade disruptions have contributed to higher metal prices. This initiative aims to stabilize market dynamics and improve operational efficiency in commodity management.

China intends to enhance its strategic reserves of essential industrial metals in 2021, aiming to strengthen the supply of critical minerals amidst rising energy-transition demands and heightened geopolitical tensions. Key metals such as cobalt, copper, nickel, and lithium will be targeted for procurement, as indicated by unnamed sources familiar with the matter. The National Food and Strategic Reserves Administration has actively engaged in price inquiries and is looking to bid on these metals.

The National Development & Reform Commission (NDRC), overseeing stockpiles, highlighted this initiative in its recent annual report to the parliament, emphasizing a faster approach to stockpiling strategic goods. However, the NDRC did not provide comments when contacted for further details. China’s state stockpiler historically manages various commodities, including crude oil and copper, with its procurement scale significantly affecting market pricing.

The main objective of these stockpiles is to ensure adequate supply during times of high demand while also offering tools for supply stabilization and price balancing. While the government occasionally announces stockpiling intentions, specific details on timing and quantity are typically classified.

In addition to focusing on strategic metals, the NDRC’s report also outlines plans to enhance storage for commodities such as grain, cotton, sugar, meat, and fertilizers, alongside national oil reserve bases.

China has been systematically diversifying its commodity sources to mitigate risks, especially in light of global trade disruptions caused by tariffs imposed during Donald Trump’s presidency. This has resulted in increased market volatility and higher metal prices, with copper prices on the London Metal Exchange recently passing $10,000 per ton, according to market data.

Recent spikes in metal prices have been further influenced by factors such as supply chain disruptions and export regulations from major producers, notably a moratorium on cobalt exports from the Democratic Republic of Congo, leading to significant price increases. The copper market has experienced fluctuations recently, with LME prices adjusting accordingly.

In conclusion, China’s strategic move to bolster its reserves of key industrial metals reflects a proactive approach to ensuring supply resilience amid increasing demand and geopolitical challenges. The initiative, led by the NDRC and the National Food and Strategic Reserves Administration, represents significant investment in essential metals, with potential implications for global market prices. Enhanced storage solutions and strategic diversification of suppliers are also vital components of China’s long-term resource management strategy.

Original Source: www.business-standard.com