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DRC: COVID-19 and cobalt crash make a one-two punch

By Christophe Le Bec, Honoré Banda
Posted on Friday, 9 October 2020 21:26, updated on Monday, 12 October 2020 07:33

Katanga Mining’s Kamoto project remains open in 2020 (Simon Dawson/Bloomberg via Getty Images)

The global health crisis is slowing the development of processing plants after plummeting cobalt prices led to the closing of some operations in 2019.

The COVID-19 crisis has exacerbated problems that were already brewing in the mining sector in the DRC, a major producer of the cobalt used in electric-car batteries and the copper used in materials for the construction and power sectors.

After hitting highs of $100,000/tn in 2018, cobalt prices crashed  to around $30,000/tn in 2019 due  to a combination of increased production and a slowdown in purchases from China, the world’s largest consumer of the mineral.

READ MORE DRC mining risks worsen as artisanal cobalt miners turn to copper

The government’s drive to ban unprocessed exports, and the struggles of the electricity sector, have added to mining’s woes. In late June, mines minister Willy Kitobo Samsoni told media that “almost all these projects [for local processing] have been postponed until next year”.

In August 2019, Swiss commodities giant Glencore suspended operations at its Mutanda mine – the world’s largest cobalt mine, which had produced 27,000tn of cobalt and 200,000tn of copper in 2018. So far, the DRC government has lost around $1.4bn in tax revenue due to this closure.

READ MORE Glencore’s Mutanda closure may be bargaining tactic with DRC

In 2020, Glencore only has one operating mine in the region – the one at Kamoto, owned by its subsidiary Katanga Mining. The closure of the other mines has meant a total of around 17,000 workers have lost their job.

Concerns about COVID-19, particularly a three-day containment in early April, means that the annual production rate at Kamoto, which was 234,000tn of copper and 17,000tn of cobalt in 2019, has been revised downwards. The company has not made the current rate  of production public.

In addition, maintenance and development operations have been slowed down, including reports of delays in the construction of a new plant for the production of sulphuric acid, used for mineral processing.

Swiss prosecutors close in

Glencore has problems of its own too. It is facing a criminal investigation in its home country of Switzerland for failing to put in place measures to prevent alleged corrupt practices in the DRC. This investigation is the result of a wide-ranging inquiry started in May. Glencore is the first corpor­ation to be specifically targeted.

READ MORE Illicit DRC gold: London Bullion Market must do more to stop it

A group of 11 civil society organisations said in a letter to 14 of the DRC’s biggest copper and cobalt mining companies that they should end mandatory mine-site confinement policies. Mines had been sealed off to avoid COVID-19 outbreaks that could force them to shut down. Workers have reported insufficient food and water, inadequate accommodation and a lack of the correct protective equipment and hand washing facilities.

The Congolese mining sector’s growth depends on the country’s ability to provide sufficient power. Some miners are turning to small renewable projects as mega-projects like the Inga III dam face delays. Ivanhoe Mining and its partners are refurbishing the 72MW Mwadingusha dam as part of plans to launch production at the Kamoa-Kakula joint venture in 2021.

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