Tenke Fungurume mine

China Molybdenum Co. Ltd. (CMOC), a leading global mineral company headquartered in Beijing, produced 55,526 tons of cobalt in 2023, representing a 170% increase from 20,581 tons in 2022, according to a company filing on Thursday. This production level exceeds CMOC’s own guidance by over 20% and enables the company to surpass Glencore Plc (LON:GLEN) as the world’s largest cobalt producer.

Glencore, headquartered in Baar, Switzerland, had forecasted cobalt production of up to 42,000 tons in 2023. The company is scheduled to announce full 2023 production results next month. CMOC’s massive increase in output is largely attributed to the Kisanfu cobalt-copper mine in the Democratic Republic of Congo (DRC), which came online in the second quarter of 2022. The $1.8 billion Kisanfu mine is owned by CMOC’s Congolese subsidiary Tenke Fungurume Mining S.A. (TFM).

Along with rising production from Indonesia, CMOC’s increased cobalt supply has contributed to a substantial surplus in the cobalt market in 2023. This oversupply triggered a 30% drop in cobalt prices over the course of last year. By mid-2023, the mismatch between supply and demand had become so severe that Glencore began stockpiling surplus cobalt from its DRC operations in an effort to balance the market.

In addition to being the world’s top cobalt producer, CMOC is now one of the leading global copper producers. The company’s copper output jumped 51% to 419,539 tons in 2023. CMOC’s rising cobalt and copper production comes at a time when many miners are struggling to increase output to meet growing demand, especially for electric vehicle batteries.

Cobalt is a critical mineral used in lithium-ion batteries for electric vehicles, consumer electronics and energy storage systems. Approximately 70% of the world’s cobalt is mined in the DRC, a country plagued by political instability, human rights violations, child labour and other ethical concerns. Major multinational mining companies like Glencore and CMOC have faced scrutiny over their DRC operations.

Cobalt mining is dominated by large firms from China, Switzerland and Canada. Artisanal small-scale cobalt mining by hand is also common in the DRC, frequently under dangerous, unregulated conditions. The human rights watchdog Amnesty International has reported children as young as seven years old working in Congolese artisanal cobalt mines.

Technological advances and recycling may reduce future cobalt demand growth, but it remains an essential battery ingredient. As the electric vehicle market expands dramatically in the coming decades, ethical and sustainable cobalt sourcing from conflict-free mines will become increasingly important, as CMOC and other industry leaders continue to prove their operations are operating in a conflict-free manner.

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.

Metals Acquisition Corp., a blank check firm has signed a $1.1 billion deal to acquire Glencore’s (LON:GLEN) (OTC:GLNCY) CSA copper mine in Australia. After Perth-based IGO Ltd announced it would drop out of contention, Metal Acquisition became the leading contender to acquire the asset. After a year-long race, the deal is now a reality for the firm. 

The purchase has given Metals Acquisition Corp 100% ownership and control of the mine’s operations, which will allow it to produce between 41,000 and 49,000 tons of copper per year. This gives the firm a good profit guarantee as copper is such an essential metal for the production of electric vehicles. 

In addition, the high demand for copper and the lack of supply has caused copper prices to soar by more than 25% over the past year. According to experts, this trend will continue as more and more companies join the fight against climate change, making copper a more and more sought-after metal.

Metals Acquisition Chief Executive Mick McMullen said: “Copper is expected to play a key role in the global energy transition ‘megatrend,’.

Separately, Glencore announced that it has purchased 657,264 of its ordinary shares of USD 0.01 each on the London Stock Exchange and the Multilateral Trading Facilities of Morgan Stanley & Co. International Plc. 

The purchase was completed on March 16, 2022. Glencore intends to hold the repurchased shares in treasury so the company now holds 1,408,178,868 of its ordinary shares in treasury and maintains 14,586,200,066 ordinary shares outstanding.

The purchase of the shares is part of the company’s share buyback program which is expected to be completed between February and August 2022.

Russian Review

Glencore recently announced that it will review business with Russia as the invasion of Ukraine has affected commodity markets.

Glencore has a 10.55% stake in En+Group, the Russian aluminum producer, as well as a 1% stake in Rosneft, the oil producer. This represents an investment value of $789 million and $485 million respectively by the end of 2021.

Increasingly, the list of companies cutting business ties and reviewing their operations with Russia is growing as foreign governments have lobbied for this to happen. 

Glencore’s review is expected to bring further turmoil to the aluminum market as shipping companies have also suspended ship operations to and from Russia, causing supply chain issues for the global aluminum supply chain.

“Over time, global commodity trade flows will need to adapt to some or all of Russian/Ukrainian supply being unavailable, whether due to infrastructure damage, sanctions or ethical concerns,” Glencore said.

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.

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