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Glencore raises cobalt guidance on Katanga restart

01 Feb 2018 14:26 GMT
Glencore raises cobalt guidance on Katanga restart

London, 1 February (Argus) — Switzerland-based mining company Glencore aims to produce 36,000-42,000t of cobalt this year, a 42pc increase from 2017 as production at the restarted Katanga facility ramps up.

The Katanga copper and cobalt operation in the Democratic Republic of Congo (DRC) is expected to produce 11,000t, accounting for 28pc of the company's total output for the year.

Glencore completed the first stage of whole-ore leach processing at the facility in December, producing 2,200t of copper cathode by the end of the month.

The site had been idle since September 2015, when production was halted because of oversupply of copper and cobalt on global markets.

But rising demand for cobalt chemicals from the electric vehicle battery sector pushed prices up last year, which made restarting operations at Katanga viable.

Prices for 99.8pc chemical grade cobalt broken cathode and briquettes on the European spot market was last assessed at $37.50-38.15/lb, a 156pc increase from $14.50-15/lb on 3 January last year. Glencore is a core supplier of broken cathode from its Mutanda facility in the DRC, where total cobalt production in 2017 fell by 3pc to 27,400t from 28,300t in 2016.

This was largely because of restrictions on sulphuric acid deliveries to the Mutanda site from the Mopani copper mine in neighbouring Zambia in the third quarter. Throughput restrictions at Mutanda resulting from heavy rainfall earlier in the year further contributed to the reduction in output.

Cobalt production from Glencore's nickel operations in Canada, Norway and Australia was down during the year because of a reduction in third-party feedstock used at Norwegian and Canadian operations and a planned maintenance closure at the Australian Murin Murin nickel mine in the first half of the year.

But cobalt produced from nickel operations outside the DRC continued to represent a small share at 3,500t, or 14pc, of total annual output — compared with 23,900t from African copper assets in the DRC. This share will decline further once the Katanga facility starts production this year.

Glencore announced ambitious plans last month to increase its cobalt output to around 65,000t in 2019 to meet growing electric vehicle demand.