Glencore Halts Some Cobalt Deliveries Due to Congo Export Ban
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Glencore has declared force majeure on certain cobalt deliveries from the Democratic Republic of Congo (DRC) following a government-imposed suspension on exports of this critical battery material. This information comes from three sources familiar with the situation, as reported by Reuters.
The DRC, which is the world’s largest producer of cobalt, implemented a four-month ban on all cobalt exports in February. This move aimed to reduce a supply surplus that had led to a significant drop in prices, reaching nine-year lows, and adversely affected the country’s tax revenues.
As a consequence of this export ban, Glencore, the world’s second-largest cobalt producer, has taken the unusual step of declaring force majeure on certain supply agreements for cobalt sourced from its operations in the DRC. This declaration is typically invoked in unforeseen circumstances that hinder the execution of a contract.
In response to a request for comment from Reuters, a Glencore spokesperson stated that all customers were still receiving cobalt deliveries in accordance with their contractual agreements. Last year, Glencore mined 35,100 metric tons of cobalt in concentrate and hydroxide from its DRC operations. Despite the ban, many customers continue to receive cobalt as per their contracts.
Cobalt, primarily a byproduct of copper production in the DRC, accounted for 220,000 tons, or 78%, of global cobalt output in the previous year. While it is utilized in aerospace and military components, most of the cobalt produced in the DRC is in hydroxide form, which is essential for manufacturing chemicals used in batteries for electric vehicles and mobile devices.
The market has been experiencing growing surpluses, partly due to unexpectedly low demand for electric vehicles and increased supply from operations owned by China’s CMOC Group. These factors have contributed to a decline in cobalt prices, which fell to nearly $10 per pound, or $22,000 per ton, in February. However, the DRC’s export ban, along with a force majeure declaration in March by Eurasian Resources Group, has led to a recovery in prices, which have increased by approximately 35% to trade at $15.80 per pound, or $34,832 per ton, as of Wednesday.
As the ban is set to end on June 22, the DRC government has not yet indicated whether it will extend the export suspension or consider implementing export quotas.
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