Friday, July 12, 2024
HomeEconomyMISSED OPPORTUNITY: Gercamines Boss Says DRC Losing Cobalt Dominance To Indonesia

MISSED OPPORTUNITY: Gercamines Boss Says DRC Losing Cobalt Dominance To Indonesia

The new head of Gécamines, the Democratic Republic of Congo’s state mining company, said the country had missed the opportunity to leverage its dominance in the cobalt market and attract investment off the back of the metal vital for batteries in electric cars and electronics.

Gécamines chair Guy Robert Lukama told the Financial Times that Indonesia’s sudden emergence as a rival cobalt supplier was threatening the world’s biggest producer’s market position and economic development chances unless export quotas were co-ordinated.

The DRC has struggled to use its dominance to drive up prices and push companies to invest in materials processing and battery manufacturing in the country, he added, as other nations rich in the resources used in clean energy tech such as Indonesia have made headway.

“We have some concerns about the cobalt market. We have a challenge with logistics and power,” he said. “The window of opportunity we had to drive the market and keep big value here — we lost it.”

The DRC produced 73 per cent of the world’s cobalt last year but that is set to shrink to 57 per cent by 2030 as Indonesia increases output as a side product of its rapidly growing nickel industry, according to the Cobalt Institute, a global lobby group for the metal.

Cobalt prices have plunged 65 per cent from $40 per pound in just over a year to $14 per pound, a crash that Lukama said had been “very painful” for the DRC.

Analysts expect a glut for at least two years, while the metal’s longer-term prospects could be challenged by efforts to reduce its use in batteries, partly due to human rights concerns linked to DRC’s wildcat cobalt mining, and the fact that it is generated as a byproduct of copper and nickel.

Lukama said Opec-style export quotas for cobalt were needed to help push prices higher, adding that the next two to three years were crucial for action.

“Producer countries aren’t driving the price. Excess of supply needs to be organised properly. Some export quotas will be useful,” he said.

Once a powerhouse of the mining industry, producing almost 500,000 tonnes of copper annually during the mid-1980s, Gécamines came close to collapse during the final years of Mobutu Sese Seko’s rule, which ended in 1997.

It now has minority stakes in most of DRC’s big cobalt and copper mines partnerships operated by foreign miners such as Glencore, CMOC and Huayou Cobalt, but it no longer operates mines.

Albert Yuma Mulimbi was removed from the top position at the ailing state miner in 2021 after a decade in charge, following corruption claims that billions of dollars of revenue were diverted from the agency for political purposes during his tenure. Mulimbi has denied any wrongdoing. Alphonse Kaputo Kalubi ran the company for just over one year before Lukama took the reins in March.

Recommended

News in-depthIndustrial metals
Chile’s move to control lithium alarms industry

Lukama is tasked with drawing up a turnround plan, including reducing hefty pension liabilities. He fired warning shots to its joint venture partners that it would review current arrangements, although he denied that was a campaign against Chinese investment. Changes could include stricter enforcement of contract provisions, revising shareholdings and mechanisms for more revenue to go to Gécamines.

Of its joint ventures, Boss Mining copper and cobalt project, launched with the Kazakh state-backed Eurasian Resources Group, was the highest priority. Kinshasa banned Boss Mining from operating after mine waste flooded into a river and a local community in March. It was “not a success story at all for us”, he said.

He also listed projects with Glencore’s Kamoto Copper Company, Hong Kong-listed Jinchuan, China’s Pengxin and MMG as up for review.

Following a tax dispute that resulted in $2.1bn of copper and cobalt stockpiles building up after a 10-month export ban, Gécamines reached a deal in April with China’s CMOC to resume shipments from Tenke Fungurume, the world’s largest cobalt mine.

CREDIT: Financial Times

RELATED ARTICLES

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular

Recent Comments