A treasure of 1,500 million dollars is piled up in the Congo

A growing pile of copper and cobalt worth approximately $1.5 billion is stuck in the Democratic Republic of Congo, locked in a stalemate over the future of one of the world’s largest battery metal mines.

The huge metal cache belongs to the Chinese CMOC Group, which is embroiled in a dispute with its Congolese state partner over royalty payments. Although its exports were blocked in mid-July, the mine Tenke Fungurume The CMOC continued to operate near capacity, simply stockpiling the extra metal until it could resume shipments, according to people familiar with the matter.

The standoff is a stark reminder of the vulnerabilities of electric vehicle supply chains, which rely heavily on a small handful of mines in a handful of countries; in the case of cobalt, Congo is the largest supplier. Battery metal prices have become increasingly volatile as producers struggle to match production with demand, creating headaches for bullish automakers and bearish miners. The Tenke Fungurume Reserve poses the threat of more abrupt changes to come.

Currently, there are approximately 120,000 tons of copper and about 12,500 tons of cobalt are waiting to leave the countryaccording to people familiar with the matter and calculations by news agencies Bloomberg. Copper accounts for the bulk of the value, at around $1.1 billion at spot prices, but it only accounts for around 7% of total global monthly production and is unlikely to affect international prices when it hits the market. .

For cobalt, however, the implications could be seismic.

Tenke Fungurume accounts for about 15% of global supply, a share of production greater than the 10% of global oil production controlled by Saudi Arabia. Surprisingly, the mercado las arregló bastante bien sin el cobalto de Tenke, porque la demande para su use en products electrónicos ha caído y la production en otros lugares está aumentando, lo que cause que los precios cayeran más de un 60% desde el máximo Last year. The eventual release of the CMOC reserve could lower them further.

At the heart of the case is the claim by state mining company Gécamines that CMOC lied about its mineral reserves and owes the company $7.6 billion in royalties and interest. The couple must also negotiate a sales contract to set the terms for future exports.

Part of the reason the reserve has become so important is that the CMOC held out hope during the conflict that a resolution was near, which prevented it from reducing activity at the site, people say. close to the operation.

However, a deal has so far proven elusive. Every day, about 500 tons of copper and 50 tons of cobalt are added to the metal reserves, which generates a growing logistical and commercial headache for CMOC and its partners.

And when the reserve finally starts moving, it will likely trigger a truck rush into the area, driving up freight costs and adding to chronic logistical bottlenecks at the Congolese border.

CMOC did not respond to an email seeking comment. Deputy Managing Director of Gécamines, Cave Leon Mwinewho oversees Tenke’s mining portfolio for the Lubumbashi-based company, did not immediately provide comment when Bloomberg contacted them by email.

Tenke’s reserves have cast a shadow over the cobalt market, turning once loyal bulls like major producer Glencore into reluctant bears.

Still, CMOC’s role in the market and its deep pockets mean it will have little incentive to dump the metal.

The Chinese company has a market capitalization of around $17 billion and said last year that Contemporary Amperex Technology, the world’s largest electric vehicle battery maker, had agreed to buy a 25% stake. He also owns IXM, a major metal trading house.

“CMOC had the balance to operate the mine and store the material during this time, so I don’t think they are under pressure to dump it overnight in a hard sell,” he said. . Caspar Rawlesdata manager Reference mineral intelligence, which estimates the size of cobalt reserves at 10,000 to 12,000 tonnes. “But at some point they’ll have to sell, and there’s already more than enough material.”

(c) 2023, The Washington Post

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