China's speed has made the Democratic Republic of the Congo (DRC) a major global mining power.
No company has contributed more to promoting the industrialization of mineral resources in the DRC than Huayou Cobalt, which currently holds a dominant position in global cobalt production.
The company was founded in 1969 as a state-owned molybdenum producer in Henan Province. Molybdenum is a raw material for steelmaking. The company steadily expanded in the early 21st century and listed on the Hong Kong Stock Exchange in 2007 with an estimated value of approximately $1 billion.
After acquiring mining assets in Australia and Brazil, its investment in the DRC placed it among the ranks of global dealmakers. In 2016, the company reached agreements with Freeport-McMoRan Inc. and Lundin Mining Corp. to acquire the Tenke Fungurume mine near Kolwezi for a total transaction value of $3.8 billion. In 2020, the company paid Freeport $550 million for the Kisanfu mining permit and last year joined the ranks of the world's top ten copper producers.
In an industry where it can take decades to convert promising geological conditions into actual mineral resources, Huayou Cobalt's progress in building the Kisanfu cobalt mine left competitors astonished. This facility, now the largest cobalt mine in the world, began production in just over two years.
This speed caught competitors off guard. The increase in cobalt production and subsequent price drops were good news for China's battery manufacturers. Contemporary Amperex Technology Co. Limited (CATL), the world's largest electric vehicle battery manufacturer, holds about a quarter of Huayou Cobalt's shares and owns a 25% stake in the Kisanfu mine.
Glencore – the company that had held the position of the world's largest cobalt producer for at least 15 years – watched its price control evaporate. In response to market changes, the Swiss commodity trader reduced production at one of its mines in the DRC in an attempt to support prices. However, this effort proved futile. Last year, Huayou Cobalt's cobalt production in the DRC was three times that of Glencore.
Huayou Cobalt denies intentionally lowering prices. The company declined to grant an interview regarding its Kisanfu mine. The company stated that excess production was an inevitable result of its efforts to increase copper output. In an email response, the company said, "We are developing our mining assets in the Democratic Republic of the Congo to extract copper. Cobalt is merely a byproduct."
Thus, the pricing power of cobalt shifted to China, backed by processing plants, battery facilities, and electric vehicle factories built domestically over several decades. According to data from trading company Darton Commodities, over 80% of cobalt refining worldwide occurred in China last year.
Source: Bloomberg
Original article: https://www.toutiao.com/article/1832810270705929/
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