During Benchmark’s most recent cobalt webinar, Glencore released the first confirmation outlining more detailed plans for restarting its DRC-based Mutanda Mining copper-cobalt operation after a period of care and maintenance. The Benchmark webinar was part of the Cobalt Institute conference on May 19, 2021.

Glencore, one of the world’s leading producers of cobalt, produces cobalt primarily as a by-product of copper mining in the Democratic Republic of the Congo (DRC), but also as a by-product of copper mining. nickel in Australia and Canada. Mutanda is a large scale copper and cobalt operation in Katanga province in the DRC, producing cobalt hydroxide and copper cathodes.

The plan to close the operation was taken in August 2019 after an extended period of low prices. At the time, cobalt hydroxide – the product produced by the Mutanda operation – was trading on average at $ 20,000 / tonne (CIF Asia) according to Benchmark’s assessment. Following the August 2019 announcement, production at the mine ceased in December 2019, with the operation producing 25,100 tonnes of cobalt that year.

Since then, following favorable EV policies put in place by governments around the world as part of the resumption of the COVID-19 pandemic, the industry has seen demand rise rapidly for the battery mineral against the backdrop of soaring EV sales. Cobalt prices started their rally at the end of 2020 with cobalt hydroxide (CIF Asia) currently up 125.1% from August 2019 in Benchmark’s latest April cobalt price assessment, with an average of $ 44,025 / tonne for the month.

This combination of rising prices and tightening supply due to strong demand will likely have been the key factors in Glencore’s decision to take Mutanda out of care and maintenance, Benchmark said.

Ash Lazenby, Cobalt Trader at Glencore has officially confirmed that the company expects the operation to start production in 2022 and as it is, the current production plan will see volumes increase to around 20,000 tonnes of cobalt by 2025, highlighting a gradual but steady ramp as market demand increases. .

The production plan is in line with Benchmark’s most recent forecast for cobalt, which predicted production to reach 19,000 tonnes by 2025 after restarting in 2022.

Benchmark indicates that restarting the operation is fundamental for the cobalt market to deliver the volumes needed for the battery industry until the mid-2020s. Even with Operation Mutanda back on line, the market is expected to be experience stock declines and marginal deficits from 2023.

In Benchmark’s view, the presented production plan is unlikely to present an oversupply in the market, as much of the hardware is likely to be locked into long-term contracts with key consumers seeking to secure the market. supply.

Benchmark notes that the lithium-ion battery supply chain is undergoing a fundamental shift as previously theoretical EV consumption translates into real demand and as global automakers begin to sell greater proportions of their fleets as than electric vehicles.

The battery supply chain continues to evolve with the evolution of cathode technology and growing commitments from producers to help the supply chain meet growing consumer demand.