The Tenke Fungurume mine in southeastern DRC on June 17, 2023 (AFP/Emmet LIVINGSTONE)
In the Democratic Republic of the Congo, huge stocks of copper and cobalt worth around US$2 billion have amassed, highlighting the vagaries of the market for metals believed to be essential to the energy transition.
Tens of thousands of tons of copper cathodes and cobalt powder are stored in the huge Tenke Fungurume mine in the south-east of the Democratic Republic of the Congo. The amount of cobalt alone is estimated at 13,000 tons, which is about 7% of last year’s world production.
Products have been stuck there for more than nine months due to a royalties dispute between Chinese group CMOC, which owns 80% of the mine, and its Congolese joint venture partner, state-owned mining company Gécamines.
At the Tenke Fungurume mine in southeastern DRC on June 17, 2023 (AFP/Emmet LIVINGSTONE)
The case coincides with the Democratic Republic of the Congo’s stated desire to renegotiate treaties it considers disadvantageous. President Felix Tshisekedi traveled to China at the end of May to discuss Chinese mining contracts, among other things.
From July 2022 to April last year, there was an export ban for Tenke Fungurume, which according to the company is 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.
The amounts are “staggering,” said an expert on mining in the Democratic Republic of the Congo, who wished to remain anonymous. “It’s nine months of production, which is on site. The deficit for the Congolese treasury is obvious,” he says.
The value of the affected reserves is estimated at approximately $1.5 billion for copper and $340 million for cobalt.
– price pressure –
At the Tenke Fungurume mine in southeastern DRC on June 17, 2023 (AFP/Emmet LIVINGSTONE)
After reaching an agreement and lifting the export ban in April, CMOC has begun evacuating its vast reserves.
A strong release of cobalt could lead to a market crash where prices are already at rock bottom. But the decision to phase out the product allayed initial fears that resuming sales of Tenke Fungurume could cause turmoil.
“The price of cobalt will not be affected,” said 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 says.
Harry Fisher, an analyst at Benchmark Mineral Intelligence, also thinks it is unlikely that the price of cobalt will continue to fall. But stocks could extend the period of low prices, he said.
According to Fastmarkets, a pricing information company, cobalt prices have fallen 65% since May 2022, from around $40 to $14 per pound.
Trucks leave the Tenke Fungurume mine in southeastern DRC on June 17, 2023 (AFP/Emmet LIVINGSTONE)
For copper, whose global production amounts to millions of tons per year, the stock levels should not lead to a price decline.
CMOC spokesman Vincent Zhou said 57,000 tons of copper left Tenke Fungurume in May and confirmed that cobalt would be gradually shipped “according to market demand”.
Trucks loaded with copper left the mine during AFP’s visit, but there was little evidence of cobalt being hauled away.
– Logistical challenge –
Nevertheless, CMOC faces a major challenge with regard to the sale of the warehouse.
Tons of copper cathodes piled up at the Tenke Fungurume mine site in southeastern DRC on June 17, 2023 (AFP/Emmet LIVINGSTONE)
Endless rows of bags of cobalt hydroxide powder line the mine site, alongside heaps of dusty copper cathodes.
Analyst Harry Fisher reckons it could take up to 10 months to liquidate the holdings, which he says poses a “logistical challenge.”
To transport the ore, a road leads to Indian Ocean ports such as Durban or Dar es Salaam. But there is only one, and it’s riddled with tolls, frequent thieves, and subject to heavy traffic jams.
The content of the agreement reached between CMOC and Gécamines in April has not been made public. The vice president of the Chinese company likened the dispute to a simple dispute in “a quarreling couple”.
Cobalt powder mined at the Tenke Fungurume mine in southeastern DRC on June 17, 2023 (AFP/Emmet LIVINGSTONE)
The anonymous mining expert, meanwhile, suggests that the dispute has finally been settled because Kinshasa needed money ahead of next December’s presidential election. In any case, according to him, the export ban did not do anyone any good. “They’re all losing money,” he says.
This case illustrates the cost of trade disputes in the Congolese mining industry.
The Democratic Republic of the Congo is Africa’s largest mining producer, supplying more than 70% of the world’s cobalt, a crucial metal for batteries used in electronics and electric cars. The country, where two-thirds of the approximately 100 million inhabitants live below the poverty line, is heavily dependent on the mining sector.
When asked for comment, Gécamines did not respond.
AFP visited the Tenke Fungurume mine as part of a trip organized by the Cobalt Institute, a lobby group.