$1.5B Copper & Cobalt Stock Blocked at Tenke Fungurume Amid CMOC-Gécamines Dispute
A growing pile of copper and cobalt worth around $1.5 billion is stuck in the Democratic Republic of Congo, caught in a standoff over the future of one of the world’s biggest battery metal mines. world.
The huge stockpile of metal is owned by China’s CMOC Group Ltd, which is locked in a dispute with its Congolese state partner over royalty payments.
While its exports were stalled in mid-July, CMOC’s Tenke Fungurume mine continued to operate near capacity, simply stockpiling extra metal until it could resume shipments, people close say folder.
The standoff is a stark reminder of the vulnerabilities in electric vehicle supply chains, which are heavily dependent on a small cluster of mines in a handful of countries – in the case of cobalt, Congo is by far the largest supplier.
Battery metal prices have become increasingly volatile as producers struggle to match production with demand, creating headaches for bullish automakers and bearish miners. The Tenke Fungurume stock poses the threat of more dramatic swings ahead.
Right now, there are about 120,000 tons of copper and about 12,500 tons of cobalt stranded waiting to leave the country, according to people familiar with the matter and Bloomberg calculations.
Copper accounts for the bulk of the value, at around $1.1 billion at spot prices, but it only accounts for around 7% of total global monthly production and is unlikely to affect international prices when it hits the market.
For cobalt, however, the implications could be seismic. Tenke Fungurume accounts for about 15% of the world’s supply – a production share larger than the 10% slice of global oil production controlled by Saudi Arabia.
Surprisingly, the market has done quite well without Tenke’s cobalt, as demand for use in electronics has plummeted and production elsewhere has increased, sending prices down more than 60% from the peak of the last year. The eventual release of CMOC stock could drive them much lower still.
At the heart of the problem is the claim by state mining company Gécamines that CMOC lied about its mineral reserves and owes the company $7.6 billion in royalties and interest. The couple must also negotiate a sales contract to define the conditions for future exports.
Part of the reason the stock has become so prominent is that the CMOC remained hopeful throughout the dispute that a resolution was near, which prevented it from recalling activity on the site, people say. familiar with the operation.
Still, a deal has so far proved elusive. Every day, approximately 500 tonnes of copper and 50 tonnes of cobalt are added to the metal reserve, creating an increasing logistical and commercial headache for CMOC and its partners.
And when the stock finally begins to move, it is likely to trigger a rush of trucks in the region, driving up freight costs and adding to chronic logistical bottlenecks at the Congolese border.
