COBALT INSTITUTE CONF 2019: DRC considering fixed price for artisanal cobalt miners
Authorities in the Democratic Republic of the Congo (DRC) are considering the possibility of agreeing a “good, fixed price” for its artisanal cobalt producers, according to Paul Mabolia from the country’s ministry of mines.
The DRC could scale up its cobalt production capacity to almost 200,000 tonnes per year by 2025 should certain factors, including sustainability of supply, be addressed, Mabolia told delegates at the Cobalt Institute’s conference in Hong Kong this week.
Some of that scale up is dependent on price conditions.
“Right now, artisanal miners get 10% of the London Metal Exchange [cobalt] price [but] why should it be 10%?” Mabolia said.
Such a price structure means artisanal supply comes on and offline as cobalt prices fluctuate – as they have done in recent years.
Cobalt prices hit near ten-year highs of $43.70-44.45 per lb, in-warehouse, in April 2018, before slumping to 26-month lows of $13.30-14.20 per lb in March this year, according to Fastmarkets MB’s industry-benchmark standard-grade cobalt price.
LME cobalt prices have seen similar fluctuations – hitting highs of $95,750 per tonne in March last year, before finding lows of $29,000 per tonne In March 2019.
“The problem is when the price goes down. We’re trying to see if we can have a better deal for [artisanal] miners,” Mabolia said.
By the same token, when cobalt prices are high, additional material enters the market which it is difficult to monitor and regulate.
“The new authorities [in the DRC] have requested [the Ministry of Mines] to be more active and present in the international market so we can get feedback on expectations [concerning sustainable, ethical supply] and what can be done to resolve the problems,” delegates in Hong Kong heard.
Artisanal cobalt production also prompts concerns over child labor within the supply chain. Artisanal miners, which account for around 20% of the DRC’s cobalt production, are “aware of what they have to do and they are starting to comply with due diligence,” Mabolia said.
But in addition to sustainability of supply, price stability and due diligence of the supply chain, transport infrastructure and a solution to the energy deficit will be required to see the DRC ramp up its cobalt output.
At present, the DRC has the capacity to produce up to 125,000tpy cobalt. With the start of the Kingamyambo-Musonoi tailings project, the restart of operations at the Kipushi project, plus the start-up of some other small projects under evaluation, capacity could near 200,000 tpy by 2025.
As of the end of 2018, around 2.5% of the DRC’s cobalt reserves are being exploited. Total activity including exploration covers 11.2% of the country’s reserves.
“We are putting more production on the line if it is necessary – we have seen some business plans and they are ready to start to producing,” Mabolia said.
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