A gigantic stock of copper and cobalt, valued at around 2 billion dollars, has accumulated in the Democratic Republic of the Congo (DRC), demonstrating the vicissitudes of the market for metals considered essential for the energy revolution.
Tens of thousands of tons of copper cathodes and cobalt dust are piled up in the huge Tenke Fungurume mine in the southeast of the DRC. The amount of cobalt is estimated at 13,000 tonnes, representing approximately 7% of last year's global production.
Products have been blocked there for more than nine months due to a royalty dispute between Chinese group CMOC, owner of the mine's 80%, and its Congolese joint venture partner, state mining company Gécamines.
This case coincides with the DRC's declared willingness to renegotiate contracts that it considers unfavorable. President Félix Tshisekedi traveled to China at the end of May to discuss, among other things, Chinese mining contracts. Export ban From July 2022 until last April, an export ban was imposed on Tenke Fungurume, the second largest cobalt mine in the world, with a monthly production of around 20,000 tons of copper and 1,500 tons of cobalt, according to the company figures.
The amounts are “staggering,” according to a mining expert in the DRC who preferred to remain anonymous. «We are talking about nine months of production that simply lies there, in the ground. The loss for the Congolese Treasury is evident,” he says.
The value of the affected stocks is estimated to be around $1.5 billion for copper and $340 million for cobalt.
Once a deal was reached in April and the export ban was lifted, CMOC began evacuating its massive stockpile. Market Collapse A sudden release of cobalt could cause a crash in the market, where prices are already at record lows. However, the decision to sell the product gradually has allayed initial fears that the resumption of sales of Tenke Fungurume would cause turbulence.
"The price of cobalt is not affected," says Zhou Jun, vice president of CMOC and director of the mine. Most of the cobalt will be sold gradually under long-term supply contracts, he explains.
Harry Fisher, an analyst at Benchmark Mineral Intelligence, also considers it unlikely that the price of cobalt will fall further. However, according to him, stocks could prolong the period of low prices. According to Fastmarkets, a price information company, cobalt prices have fallen by 65% since May 2022, going from around $40 to $14 per pound.
As for copper, because global production is in the millions of tonnes a year, stockpiles are unlikely to cause prices to fall. Inventory clearance Vincent Zhou, CMOC spokesperson, points out that 57,000 tons of copper left Tenke Fungurume in May and confirms that cobalt will be sold gradually "according to market demand."
During AFP's visit to the mine, trucks loaded with copper were leaving the site, but there was little sign of the cobalt leaving.
However, CMOC faces a considerable challenge in terms of stock clearance. Endless rows of bags of cobalt hydroxide powder line the mine site, along with piles of copper cathodes that are gathering with dust. According to analyst Harry Fisher, it could take up to ten months to clear the stock, which represents a "logistical challenge."
To evacuate the ore, there is a road that leads to Indian Ocean ports, such as Durban or Dar es Salaam. However, there is only one route and it is full of tolls, is frequently the target of theft and faces major traffic jams. «Couple dispute» The content of the agreement reached in April between CMOC and Gécamines was not made public. The vice president of the Chinese company compares the dispute to a simple fight in "a couple arguing."
The anonymous mining expert suggests that the dispute was finally resolved because Kinshasa needed funds ahead of next December's presidential elections. According to him, the export ban did not benefit anyone. "Everyone is losing money," he says.
This case illustrates the cost of trade disputes in the Congolese mining industry. The DRC is Africa's largest mining producer, supplying more than 70% of the world's cobalt, a metal crucial for batteries used in electronics and electric vehicles.
When requested for comment, Gécamines did not respond. AFP visited the Tenke Fungurume mine as part of a trip organized by the Cobalt Institute, a pressure group.