Coronavirus threatens cobalt supply in the DRC

A coronavirus outbreak in the Democratic Republic of Congo (DRC) could threaten global cobalt supply as the government identifies cases in the southern mining region.

Authorities in the DRC today put the province of Haut-Katanga in the south of the country under a temporary lockdown because of a potential coronavirus outbreak. Lubumbashi, the DRC's second largest city and a cobalt transport hub, is now on lockdown. Cobalt mining firm Chemaf, which is located in the province, is complying with the order, according to multiple sources.

Two people tested positive following a flight from Kinchasa that contained over 70 people.

The neighbouring province of Lualaba is home to mines belonging to trading firm Glencore, Eurasian Resources Group (ERG) and diversified metals producer China Molybdenum, and provides the bulk of the DRC's cobalt. Most concessions are located around the city of Kolwezi.

The lockdown of Haut-Katanga and in particular Lubumbashi will make it difficult to move material through regular trade routes during the next 48 hours. It is unclear whether the lockdown will continue for longer.

The prospect of a wider outbreak in the DRC was described as "terrifying" by one cobalt buyer in Europe familiar with the region. It added that given the level of development in the country, "some seriously bad things could happen" if an outbreak were to occur in a similar way to Italy. Traders in Europe became increasingly reluctant to sell cobalt metal today as news of the lockdown spread, aware that prices could rise sharply if supply from the DRC is cut off.

Glencore confirmed that none of its operations have been closed, and so far China Molybdenum and ERG have not announced any shutdowns. One producer in the Kolwezi area said "all the evidence from other outbreaks points to the situation getting worse before it gets better."

Elsewhere in the cobalt supply chain, ports in South Africa are being subjected to tighter restrictions

Argus last assessed cobalt hydroxide prices at $9.80-10.60/lb cif China on 17 March, down from $10-11.20/lb cif China at the beginning of March.

By Thomas Kavanagh