CMOC Group Overtakes Glencore as Top Cobalt Producer
China’s CMOC Group Ltd. has solidified its position as the world’s leading cobalt producer, generating more than three times the output of its well-known rival, Glencore Plc. This significant surge in production has further depressed cobalt prices.
Last year, CMOC surpassed Glencore to become the top producer. Recent first-half output figures reveal a widening gap between the two companies.
While Glencore’s production fell 27% to 15,900 tons, CMOC’s output more than doubled to 54,024 tons, nearing its full-year production guidance.
Cobalt prices have dropped 70% from their peak around two years ago, reaching their lowest levels since 2016, due to an influx of new production outpacing demand.
CMOC’s increased production, particularly from its two large mines in the Democratic Republic of Congo, has significantly contributed to this oversupply. In contrast, Glencore has cut its output in response to weak prices.
“The recent output numbers from CMOC are astounding,” said Thomas Matthews, an analyst at consultancy CRU Group. “Market balance is unlikely to be restored anytime soon.” CRU predicts a global cobalt surplus until at least 2026.
CMOC’s dominance stems from the expansion of its Tenke Fungurume mine and the ramp-up of its Kisanfu project. With a market value of about $22 billion, CMOC was on par with Glencore in cobalt production as recently as the first half of 2023. This year, CMOC’s production guidance was 60,000 to 70,000 tons.
“It now appears very likely they will surpass the 100,000-ton mark,” CRU’s Matthews added. With plans to increase copper output to 1 million tons per year by 2028, CMOC’s cobalt production is expected to rise further.
Benchmark prices for cobalt metal have plummeted from over $40 per pound in May 2022 to $11.83 recently, according to Fastmarkets Ltd.
While supply surges, demand growth has faltered as automakers shift to cobalt-free batteries. The average cobalt intensity in batteries has halved over the last three years, CRU reports.
In addition to CMOC’s projects, other major cobalt supply increases are expected. Jinchuan Group Co.’s Musonoi copper project in the DRC and various projects in Indonesia by Nickel Industries Ltd., Vale SA, and Zhejiang Huayou Cobalt Co. are set to further boost global cobalt production.
