Glencore’s Mutanda Cobalt Mine Shuts in a Hurry

The largest cobalt-producing mine in the world, Glencore’s (LSE:GLEN) Mutanda mine in the Democratic Republic of the Congo has been shuttered a month earlier than planned.

According to the operating company, Mutanda Mining, it was having trouble getting its hands on sulfuric acid, which is a key component in copper and cobalt extraction.

“Mutanda Mining is forced to halt extraction and treatment of copper and cobalt earlier than planned due to difficulties in procuring acid,” it said in a letter to employees as reported by Reuters.

In early August, when the Anglo-Swiss company revealed it was pulling the plug on Mutanda, it pointed to falling prices as the catalyst for the decision, though cobalt analysts noted that there was likely more to the story.

Battery metals analyst with House Mountain Partners Chris Berry told INN at the time that using cobalt prices as reasoning was flimsy given it was a by-product of copper.

“My sense is that higher input costs and taxes are the real killers here rather than commodity prices,” he said.

Indeed, the company has been fighting negative press in the African nation and globally all the way through 2018 and 2019, with higher taxes being piled on by the Kinshasa government. Worse, a mine owned by the company was the site of a mining tragedy when 43 artisanal miners were killed on a copper concession owned by Glencore.

Benchmark Mineral Intelligence senior analyst Caspar Rawles said that a closure as big as Mutanda would change the market for the important battery metal considerably.

“Prices are likely to rise, and early indications that we have picked up from the market are that they have already started to react,” Rawles said to INN in August.

He noted that the closure would likely help other producers, even if it shook up the overall cobalt supply chain.

Earlier in November, Rawles said that 2020 would likely see higher prices as the impact of the Mutanda closure started to bite into the supply chain.

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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.

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