Exclusive Congo Measuring Cobalt Export Quota to Resurrect Prices amid Oversupply
By Sonia Rolley and Felix Njini
JOHANNESBURG (Reuters) – The Democratic Republic of the Congo is considering introducing a cobalt export quota as the world’s largest supplier of battery metal is seeking oversupply and rise in supply.
Cobalt prices have suffered at a historically low level amidst slacking demand from automakers, with mines increasing copper production from which cobalt is extracted as a by-product, taking advantage of the high prices.
Plans to introduce restrictions have been debated within the Congolese government, but no final decision has been made, sources said they refused to discuss sensitive issues.
Congo banned all exports of battery metals for four months on Monday, blocking oversupply. The ban, announced by authorities for the regulation and control of the strategic mineral and material market, said export curbs could be reviewed in three months and changed or ended depending on the outcome.
The temporary ban is not sufficient to limit metal flow in the market, and it is unlikely to have a lasting impact on prices that companies expect to further weaken when they release stockpile metals, sources and analysts said.
Sources said the Congolese government will ultimately introduce allocations for metal exports that will be negotiated during the period of the export halt.
Arecom and Mining Minister Kizito Pakabomba did not immediately respond to questions e-mailed.
Communications Minister Patrick Muyaya was unable to answer Reuters questions immediately.
Previous attempts by the government to persuade mining companies have persuaded them to voluntarily reduce the flow of metals in international markets, sources say.
Two sources said that attempts by state miner Gekamine to persuade China’s CMOC group to manage cobalt flows in the market and limit the impact on prices through joint ventures have been unsuccessful.
CMOC doubles the cobalt output
CMOC, the world’s largest cobalt miner, has more than doubled its cobalt output to about 114,000 metric tons last year, increasing copper output at Congo’s Tenke fungi and Xanhu mines. CMOC’s Congo mine produced approximately 650,000 tonnes of copper.
The CMC said production in the mines would not be affected by the temporary cargo ban, and spokesman Vincent Zhou told Reuters that the company did not expect it to have a major impact on business performance.
Eurasian Resources Group and Glencore, who are also cobalt producers at Congo, declined to comment.