Last week, China Molybdenum (CMOC) announced its intention to invest US$1.826Bn in phase one of the Kisanfu (KFM) Project in the Democratic Republic of Congo (DRC). The project is owned by CMOC (71.25%), together with Chinese battery maker CATL (23.75%) and DRC state-owned miner Gécamines (5%). CMOC acquired its stake in KFM from Freeport-McMoRan in 2020, having bought Freeport's share of the adjacent Tenke Fungurume Mine (TFM) in 2019.

CMOC's investment will be spent on engineering (US$1.4Bn), construction (US$161M) and reserve licensing (US$238M) and KFM is expected to start production in 2023. It has a mineral resource of 365Mt grading 1.72% Cu (6.3Mt copper contained) and 0.85% Co (3.1Mt cobalt contained) and will produce copper-cobalt concentrate, cobalt hydroxide, and copper cathode at a production rate of 90ktpy copper and 30ktpy cobalt.

The announcement highlights CMOC's continued commitment to expanding its cobalt feedstock capacity and output. In August 2021, the company announced its plans to invest US$2.5Bn to expand the TFM by building three ore production lines, expected to boost the average output of copper by 200ktpy and cobalt by 17ktpy. Project Blue considers these projects highly important if feedstock supply is to meet demand later in the decade.

However, media reports suggest that all is not well at Tenke. Earlier this week, a temporary administrator appointed by a DRC court ordered CMOC to suspend the marketing and export of its TFM production. This came after reports of a protracted dispute between CMOC, which owns 80% of TFM, and DRC state-owned miner Gécamines, which holds the other 20%. It is alleged that the DRC state suspects CMOC of understating reserve levels and reducing royalties due to Gécamines. CMOC denies this.

The future relationship between CMOC and the DRC Government could be of huge consequence to the cobalt market. At 18,502kt Co output last year, TFM was the world's second-biggest cobalt-producing mine after Glencore's Katanga (although Glencore's Mutanda, the world's largest mine, was still ramping up after a temporary closure). Assuming a steady rate of output, TFM's mine and refinery contribute 1,500tpy of cobalt feedstock into the supply chain. Thus, even a short-term suspension of exports could impact CMOC's customers significantly. Longer term, given the importance of Kisanfu and the TFM expansion to future market balance, a protracted fallout between CMOC and the DRC state would have huge consequences for future market fundamentals.