Katanga Mining, a Toronto-listed company and a subsidiary of Glencore, has suspended cobalt exports from its operations in the Democratic Republic of Congo until the third quarter of next year. This is as a result of the miner finding traces of uranium in the mineral.

Glencore plans to stockpile its cobalt supplies while it builds a special plant to remove radioactivity. The ion exchange system, which will remove the uranium from the cobalt, is expected to cost about $25 million. The company will continue to mine both cobalt and copper at the Kamoto Copper Company while the plant is being built.

Katanga boasts one of Congo’s biggest reserves of copper and cobalt, but the mine has underperformed for decades. In 2015, Glencore suspended operations to address the problems and upgrade the facilities. Production restarted in December, and the mine is scheduled to hit 300 000 tons of copper next year, when it will account for about a fifth of Glencore’s global production.

Reuters reports that the suspension of cobalt production by Glencore comes at a convenient time for cobalt producers because there are mounting concerns that too much is currently being mined. There has been a supply-side response to a spike in cobalt prices, fuelled by bullish expectations of growth in electric vehicles, with Glencore being one of the companies ramping up cobalt supply this year, boosting production by 44% in the first nine months.

In a statement, RBC Capital Markets, a division of the Royal Bank of Canada, said that assuming there are no uranium issues that this uncovers elsewhere, this production will benefit from any positive price impact. “The delay in exports would be offset by the impact on the cobalt price to revenues coming from Mutanda and other cobalt production in Glencore globally,” RBC Capital Markets said.

“Our published estimates anticipate that Glencore will produce 22,000 tonnes of cobalt between Q3 2018 and Q2 2019. At spot prices, this would account for a delay of $700m of revenues. But this also accounts for, on an annualised basis, 25% of the world’s cobalt supply (30kt of 120kt). Over this period, Mutanda will produce 16.5kt and nickel will produce 5.0kt as a by-product.”


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