The Chinese mining company MMG Ltd. has decided to temporarily close its new cobalt processing plant in the Democratic Republic of the Congo (DRC) less than 15 months after its launch. This decision was driven by a historic decline in cobalt prices, a metal critical for electric vehicle battery production.
In December 2024, MMG Ltd. announced the suspension of operations at its Kinsevere mine plant, which had recently begun cobalt processing alongside increased copper production. The main reasons for this decision include:
Adverse market conditions for cobalt. The cobalt market is currently experiencing a significant price downturn, rendering production less profitable.
Export ban imposed by the Congolese government. Last week, the authorities unexpectedly implemented a four-month export ban on cobalt, influencing both availability and pricing of the metal.
The export ban is expected to affect all stages of the cobalt supply chain. This decision is part of a broader strategy by the Congolese government to control excess supply and regulate pricing on critical minerals used in electric vehicle manufacturing.
MMG Ltd. completed a project to increase copper production and launch cobalt processing at the Kinsevere mine at a cost of up to $600 million. Such substantial investments underscore the importance of the DRC as the world's second-largest source of copper, as well as its global role in cobalt supply.
The cobalt market continues to face several challenges that may affect future supply and demand dynamics. Key points to consider include:
Increased competition from other cobalt suppliers.
Growing interest in alternative raw material sources.
Development of recycling technologies that could reduce dependence on cobalt.
These market conditions are influenced by various factors, including regulatory changes, trade dynamics, and fluctuations in global demand for electric vehicles.
Despite the current challenges, the cobalt market has the potential for recovery. Investments in research and development focusing on alternative battery technologies may lead to strategic shifts and new demand for cobalt. Forecasts indicate that the surplus supply in the short term could be balanced by long-term demand growth.
The temporary closure of MMG Ltd.'s cobalt processing plant in the DRC underscores the importance of careful monitoring of market conditions and adapting to them. Expectations of market recovery, along with potential shifts in supply strategies, could create new opportunities for producers in China and other regions.
It's concerning to see such a quick turnaround for MMG's cobalt plant, reflecting the volatility of the EV market.
Tough break for MMG Ltd., but it's a reminder of how volatile the cobalt market can be.
It's concerning to see such a quick shutdown; hopefully, this isn't a sign of ongoing instability in the cobalt market.
