Swapping aluminum for copper will maintain China’s resources, group says
China depends on overseas imports for 60% of its aluminum resources as opposed to 70% of its copper resources.
China’s CMOC Group Ltd. has strengthened its status as the world’s cobalt king, churning out more than three times as much as better-known rival Glencore Plc after a stunning output surge that’s deepened the battery metal’s price rout.
The Chinese mining giant leapfrogged Glencore only last year to become the top producer, but the pair’s first-half output figures exposed a growing chasm between the two. Glencore’s production slumped 27% to 15,900 tons, while CMOC’s more than doubled to 54,024 tons — not far shy of its guidance for the entire year.
Cobalt prices have plunged 70% since a peak around two years ago to the lowest since 2016 as a wave of new production overwhelms demand. CMOC has played a major role as it ramps up two huge mines in Democratic Republic of Congo, where it produces cobalt as a by-product of copper. Meanwhile, Glencore responded to weak cobalt prices by cutting its output in the African nation.
Recent output numbers from CMOC “really are crazy,” Thomas Matthews, analyst at consultancy CRU Group said by email. “In terms of when the market will come back to balance, it’s a case of later rather than sooner,” he said. CRU predicts a global surplus until at least 2026.
CMOC’s cobalt clout has come via the expansion of its giant Tenke Fungurume mine and, more recently, the ramp-up of its Kisanfu project. The Chinese group, valued at about $22 billion, was neck-and-neck with Glencore on cobalt as recently as the first half of 2023. CMOC’s output guidance for this year was for 60,000 tons to 70,000 tons.
“It now looks very likely that they will break the 100,000-ton mark,” CRU’s Matthews said. With plans to raise copper output to 1 million tons a year by 2028, cobalt production will naturally go even higher, he said.
Benchmark prices for cobalt metal have collapsed from a peak above $40 a pound in May 2022 to $11.83 on Wednesday, according to researcher Fastmarkets Ltd. While supply booms, demand growth has wavered as carmakers switch to cobalt-free batteries: the average cobalt intensity of batteries has halved in the last three years, according to CRU.
Besides CMOC’s developments, there are several other major cobalt supply boosts in the pipeline, including Jinchuan Group Co.’s Musonoi copper project, also in DRC. In Indonesia, where cobalt is a by-product of the booming nickel industry, there are projects by Nickel Industries Ltd., Vale SA and Zeijiang Huayou Cobalt Co.
(By Annie Lee)
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