The Democratic Republic of Congo has moved to control nearly 15 percent of world’s cobalt production through its state company Entreprise Generale du Cobalt (EGC).
Mr Jean-Dominique Takis Kumbo, the head of the new state cobalt buyer, told the media that EGC would have a monopoly on all hand-dug cobalt in the SADC member, giving it power to improve working conditions and potential control.
Congo accounts for nearly 70 percent of the global supply of cobalt used in the lithium-ion batteries that power most electric vehicles.
According to Mr Takis, he’s hoping that control of 15 percent is a market share big enough to help influence cobalt prices the way Saudi Arabian Oil Co (Aramco) does with oil, and ultimately boost profit for the state.
“We believe that EGC will introduce the image and identity of Congo to the markets for those involved in cobalt,” said Mr Takis.
However, there are ongoing concerns about the cobalt industry which have prompted miners and carmakers to reassure customers about ethically mined supplies of the metal. For example in 2019, BMW AG said it won’t buy metal from artisanal sources, and like Tesla Inc, is among manufacturers backing initiatives to improve conditions at the sites.
Once EGC is up and running, all other buyers of artisanal cobalt will have six months to shut down, Mr Takis said.
The state company will produce about 8,000 tonnes of cobalt contained in hydroxide form in 2021, with output expanding “exponentially” in the years to come, he said.
Details indicate that EGC is partnering with trading house Trafigura Group in a five-year deal to finance the creation and control of artisanal mining zones, ore-purchasing stations and costs related to buying, processing and delivering cobalt hydroxide to end buyers.
Trafigura is still assessing the investment required to prepare the first accredited mining site.
“We foresee a considerable body of work to bring the site up to a level that meets the newly launched EGC standard,” a Trafigura spokesperson said last Thursday.
While artisanal miners’ contribution to Congo’s cobalt production has at times reached 20 percent, it dropped significantly last year amid low prices, the impact of COVID-19 and expanded industrial output, Mr Andries Gerbens, a director of Darton Commodities, said by phone Friday.
While Mr Gerbens expects artisanal output to increase again as the cobalt price rises, an 8,000-ton target for 2021 is “ambitious” and the possibility of EGC capturing Congo’s entire artisanal market is “unrealistic at least in the short term”.
Cobalt prices have risen almost 70 percent in the past year and now trade at more than US$50,000 a tonne on the London Metal Exchange.
Takis said mining production at first will be limited to a single site known as Kasulo in Kolwezi, a town 820 miles southeast of the capital, Kinshasa.
The initial investment to prepare the site will cost US$15 million, after which EGC hopes to have US$7 million to US$8 million available per week to purchase and process cobalt into hydroxide form, Mr Takis said.
While Trafigura will prepare all of EGC’s cobalt for market, the state company can keep 50 percent of the output for itself and sell it separately, Mr Takis said. It’s also in talks with processing plants in Congo that currently treat artisanal cobalt to switch to EGC’s product. “These production plants will, one way or another, come to an agreement with EGC in order to continue to operate,” he said. – Taarifa