EXCLUSIVE: DRC bans cobalt, copper concentrate exports, cutting off Zambia trade

The Democratic Republic of Congo (DRC), the world’s top producer of cobalt and a key copper producer, has re-enacted an export ban on copper and cobalt concentrates, according to official documents obtained by Fastmarkets.

“The exportation of copper and cobalt concentrates is banned,” a letter sent to miners signed by finance minister Henri Yav Mulang and minister of mines Martin Kabwelulu said.

In a revision of a previous November 21 ruling referred to as 0913/ CAB, 243/CAB and Number 1 document from the mining ministry, the latest documents stipulate metal concentrates and certain blended concentrates can only be sold domestically, with all contradictory rulings to be abolished.

The documents, published on February 16, said the new rules will be effective from the date of publication. Exports of cobalt hydroxide will be unaffected, Fastmarkets understands.

The decision is the latest effort from the DRC to impose state control over its mining sector and capture a greater portion of the value chain by increasing domestic refined metal output.

The DRC mines 60% of the world’s supply of cobalt, the key battery ingredient in electric vehicles which are touted to displace the internal combustion engine.

“This is another development that should support cobalt prices, we have already seen Katanga halt exports of cobalt, the Boss mine (DRC) and Chambishi smelter (Zambia) put on care and maintenance, all of which should tighten up what was looking like a market in oversupply,” Fastmarkets head of base metals and battery research William Adams said.

“Given that the disruptions in DRC/Zambia have changed the fundamentals, key now will be whether those holding other cobalt stocks hold on to them tightly or sell them,” Adams added.

The Fastmarkets standard-grade cobalt price is at a two-and-a-half-year low of $13.90-14.85 per lb ($30,644-32,738 per tonne) as of the most recent weekly pricing session on Friday March 15.

Meanwhile treatment and refining charges paid for copper concentrates have sunk to 10-month lows of $69 per tonne / 6.9 cents per lb as of mid-March with the market short of spot supply.

Export ban cuts off Zambian copper trade
With the outward intention of encouraging domestic refined production, the DRC government’s decision has raised doubts from local copper producers. The country’s mines are already directed to produce solvent extraction and electrowinning (SX-EW) copper cathodes straight from mines.

“The majority of DRC copper production capacity is for SX-EW cathodes, while the SX-EW facilities are less likely to process copper concentrates. There are not many ER facilities here,” a producer source said.

SX-EW cathodes are made by using a leach process to extract copper mainly from oxide ores, while electro-refined (ER) cathodes are produced in high-temperature furnace smelters from concentrate made mainly of sulfide ores.

SX-EW production from DRC stood at 823,700 tonnes in 2018, while mined production stood at 1.178 million tonnes of copper, according to the World Bureau of Metal Statistics (WBMS).

Nevertheless, the laws could be beneficial for China Nonferrous Mining Corp’s Lualaba smelter, which is set to bring 120,000 per year of blister into production in the DRC in 2020.

DRC’s ban on concentrate exports comes after neighboring Zambia implemented a 5% import duty on copper concentrates and cobalt concentrate.

Copper concentrates, in particular, are at the heart of trade flows between the two largest copper producing countries in Africa and make up over 60% of total trade, according to the Zambian government.

The introduction of the Zambian import duty has led to exporters stockpiling DRC concentrate in the Zambian bonded zone in the hope the tax would be withdrawn, Fastmarkets reported earlier.

In terms of cobalt, the DRC exported 134,614 tonnes of ores and concentrates to China – the largest buyer of DRC-origin cobalt materials – in 2018, according to official but unconfirmed data from Fastmarkets’ sources. This equals roughly 13,000 tonnes of cobalt metal.

Volumes of exported cobalt concentrate to cathode or hydroxide producers in China are on the wane but are still significant, sources said.

“A couple of years ago they were exporting a lot of cobalt concentrates. Now the Chinese have built plants in Kantanga and they’re producing hydroxide there,” a second trader said. “But for sure there’s a lot of cobalt concentrates going to China at the moment.”

Simon Tamu Waku, president of the Chamber of Mines of the DRC and former mining minister of the DRC, said that he was not aware of the ban and so could not comment when contacted by Fastmarkets on Monday March 18.

The DRC ministry of mines did not respond to Fastmarkets’ requests for comment at the time of publication.

Additional reporting by Susan Zhou in Shanghai.

[Editor’s note: This article was updated to include official but unconfirmed figures for DRC-origin shipments of cobalt ores and concentrates to China in 2018.]