TORONTO – Sherritt International Corp said on Tuesday that recent weakness in the price of cobalt, a key material in rechargeable batteries, is expected to be temporary as demand continues to grow from the electric vehicle market.

Toronto-based Sherritt said prices softened in the second quarter on growing market sentiment that price gains had outpaced an increase in demand. Consumers then began delaying purchases, waiting for prices to bottom, the miner said.

The average price of cobalt rose 66% over the same three-month period in 2017, said Sherritt, to $42.93/lb, marking an eighth consecutive quarter of higher prices.

Prices are also likely to strengthen on supply risk concerns linked to the Democratic Republic of Congo (DRC), said the company. The DRC supplies some two thirds of the world's cobalt, but has issues with child labor and political risk.

"As cobalt prices have a limited impact on overall battery pack costs, high prices are not expected to cause supply-chain disruptions or delay the growth of the electric vehicle market," the diversified miner said.

"The risk of cobalt substitution in electric vehicle battery production in the near term is relatively low given cobalt's unique energy transference properties," it added.

Cobalt customer Panasonic recently suspended ties with Sherritt, Reuters exclusively reported, due to concerns that its cobalt, used in batteries made for Tesla cars, came from Cuba, a country subject to US sanctions.

Sherritt had declined to comment on questions about whether it sold cobalt to Panasonic.

Sherritt, which has power, oil and metal investments in Canada, Cuba and Madagascar, reported a net profit of C$2.8-million or 1 Canadian cent a share in the quarter. That compares to a net loss of C$101.9-million, or 35 Canadian cents a share, in the same period last year.

Revenue slipped to C$201.1-million from C$231-million.