CMOC and its state-owned partner Gécamines have reached a “consensus on the royalties issue” at the Tenke Fungurume (TFM) operation, according to a Hong Kong stock exchange filing.

Exports from Tenke have been blocked since July 2022, when an administrator appointed by a DRC court ordered CMOC to suspend the marketing and export of its TFM production. The ban was the result of a dispute between CMOC, which owns 80% of TFM, and DRC state-owned miner Gécamines, which holds the other 20% – specifically related to allegations (denied by CMOC) that CMOC had underestimated reserve levels and reduced royalties due to Gécamines. The state-owned miner reportedly expected US$7.6Bn in royalties and interest. The details of the settlement are unknown.

The resolution will unlock a stockpile of upwards of 15kt of cobalt at TFM and the market will be watching closely to see what impact this will have on (already subdued) prices.

Prices have been impacted by relatively sluggish demand in recent months, mainly owing to zero-COVID in China impacting consumption in the world’s biggest market. Set against this, the intermediates market has swung into a significant surplus. Hydroxide stocks have been building up – not just at Tenke, but at other producers in the DRC (e.g., Glencore) as well as in storage facilities in Zambia and South Africa. Meanwhile, the ramp-up of Indonesian HPAL (high pressure acid leaching of laterite ores) has also contributed to the oversupply situation.

It will be interesting to see what impact the CMOC news has on cobalt prices. As set out in a recent Project Blue opinion piece – cobalt is complicated, and suggestions that it is “superabundant” are somewhat misleading. As is the case for many metals, the idea of just one “cobalt market” can be unhelpful when looking to understand supply, demand, and price dynamics. While still a simplification, it makes better sense to think of the “intermediates market”, the “metals market” and the “chemicals market.” Each of these interlinked markets has different drivers and pressure points. Imbalances in any of the three can translate into price increases/decreases. Read our “long-read” take on cobalt market imbalances and their impact on prices here.

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