Congo Suspends Cobalt Exports For Four Months Amid Oversupply
The Democratic Republic of Congo says it’s suspending cobalt exports for four months to rein in oversupply of the battery metal on the international market.
Cobalt production in Congo – which produces about three-quarters of the world’s supply of the material used in electric-vehicle batteries – has soared in recent years, as China’s CMOC Group Ltd. ramped up output at two large mines in the country causing supply to outpace demand and prices to tumble.
“Exports must be aligned with world demand,” Patrick Luabeya, president of the Authority for the Regulation and Control of Strategic Mineral Substances’ Markets, known as ARECOMS, told Bloomberg in written responses to questions.
The measures came into force on Feb. 22, according Luabeya. A day earlier, the prime minister and mines minister signed a decree, seen by Bloomberg News, allowing the regulator to take temporary action, including barring exports, “in case of circumstances affecting the stability of the market.”
Benchmark metal prices have dropped below $10 a pound, a level not breached for 21 years apart from a brief dip in late 2015, according to Fastmarkets data. Cobalt hydroxide, the main form of the metal produced in Congo, has slid below $6 a pound.
The government of Congo, which is also the world’s second-biggest producer of copper, “has been carefully reviewing market dynamics” for a year, according to Luabeya.
The situation required “immediate action” as years of illegal mining and uncontrolled exports from both industrial and semi-industrial producers had led to excessive supply, “posing a serious threat to the country and its domestic and international investors,” he said.
Cobalt is extracted as a byproduct of copper in Congo. While the block on cobalt shipments applies to all producers “unilaterally and without exception,” there are no curbs on production and there should be no impact on copper exports, Luabeya said. “Since copper and cobalt are marketed separately, exports of copper can continue.”
The two largest cobalt miners after CMOC are Glencore Plc and Eurasian Resources Group.
The decision will be reviewed in three months, Luabeya said. Meanwhile, the agency is preparing additional measures to balance the cobalt market, encouraging more processing of strategic minerals in Congo and achieve “a transparent and fair pricing mechanism,” he said.
