Glencore to halt production at Mutanda

Switzerland-based mining and trading firm Glencore will halt production at Mutanda, the world's largest cobalt mine, at the end of this year, the firm has said.

The company will transition the Mutanda copper-cobalt mine to "temporary care and maintenance" by the end of 2019, chief executive Ivan Glasenburg said. The decision was made in response to "reduced economic viability in the current market environment", mainly referring to a sharp fall in cobalt prices.

Glencore's half-year results reflected the fall in cobalt and other metal prices, with earnings down by $5.6bn in the six months to June. Mutanda Mining produced 13,400t of cobalt in January-June, a rise of 14pc from the first half of 2018. The mine produced 53,700t of copper in the first half of this year.

"Mutanda will continue to evaluate its operations and will recommence once economic conditions sufficiently improve," Glasenburg said. "We will continue to progress our studies on the Mutanda sulphide project, which has the potential to provide a long-term life of mine."

Cobalt prices have fallen sharply this year. European prices for chemical-grade metal were assessed at $12.00-12.60/lb yesterday, down from $27-30/lb on 2 January. Chinese prices for 99.8pc electrolytic cobalt metal stood at Yn220-235/lb, down from Yn350-365/lb on 2 January.

Spot demand for cobalt metal and chemicals such as cobalt sulphate and cobalt tetroxide has fallen in recent months because of a slowdown in the smartphone market and the gradual transition from internal combustion engines to electric vehicles (EVs). Cobalt is a key component in battery cathodes.

At the same time, the market has become oversupplied as Glencore has opened its Katanga mine in the Democratic Republic of Congo (DRC), which produced 6,100t in January-June. Glencore expects to produce 40,000-46,000t of cobalt this year. Other mines have opened such as the Ambatovy project in Madagascar. Briquette material has since been available for low prices, sometimes undercutting broken cathode and other briquette material. Recent offers were reported at $11.90/lb.

The longer-term demand outlook for cobalt remains positive. Several large automotive manufacturers plan to release new flagship EV models as part of a wider electrification of the transport industry. Europe's largest automaker, Volkswagen, plans to sell 22mn EVs over the next 10 years and plans to release 70 new EV models by 2028.