From MinorMetals.com:

"London, 24 January 2008 - Structural changes in the cobalt market, as well as shifts in production, have led to the differential between 99.80 and 99.30 percent increasing -- a trend that may continue.

Traders said that declining production from the former Falconbridge (nowXstrata) has resulted in the premium over other grades widening.

Falconbridge, a 99.80 percent cobalt producer, saw its 2007 output decline by some 1,000 tonnes, around one-fifth below 2006. This took place when demand of its high-grade metal from the commercial and military aerospace sectors is rising.

"The shortage of Falconbridge cobalt has led to an increasingly widening premium for Falconbridge over other grades-- currently the swap market versus Russian or 99.6 cathodes is over$3.25 lb and seemingly heading to $4.0 lb," one said.

Also, as Falconbridge is now owned by Xstrata, its cobalt is marketed differently and more efficiently. So the leakage to the free market hasvirtually been eliminated."