What's Happening?
The U.S. Defense Department is planning to purchase cobalt worth up to $500 million to bolster its defense stockpiles. This move comes amid efforts to enhance the country's critical mineral supplies, following China's restrictions on rare earth exports. The Department of Defense and the Defense Logistics Agency are seeking offers for alloy-grade cobalt, totaling approximately 7,480 tons over the next five years. The tender is limited to three companies: Vale in Canada, Sumitomo Metal Mining in Japan, and Glencore Nikkelverk in Norway. Cobalt is essential for batteries and high-temperature sections of jet engines, making it a strategic resource for national security.
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Why It's Important?
The U.S. government's decision to procure cobalt is a strategic response to China's dominance in the rare earth sector, which has impacted global supply chains. By securing cobalt supplies, the U.S. aims to reduce dependency on foreign sources and ensure the availability of critical minerals for defense applications. This initiative aligns with broader efforts to strengthen domestic production and supply chains, enhancing national security and economic resilience. The procurement could benefit companies involved in cobalt production, while potentially increasing competition and innovation in the sector.
