Buenassa intends to allocate $US350M to develop a copper-cobalt plant in the DRC

The DRC government is backing a new domestically owned copper-cobalt plant to help formalise artisanal mining in the country. The US$350M plant will be developed by privately held Congolese firm Buenassa. According to Bloomberg reports, Buenassa will collaborate with Washington-based financial consulting firm Delphos International to secure additional funding. The news was announced during the Global Africa Business Initiative (GABI) where the DRC’s Minister of Industry, Julien Paluku, stated initial funds for the project's feasibility study could be through the DRC’s Industry Promotional Fund.

The plant is intended to process ASM feedstock to produce 30ktpy copper cathodes and 5ktpy cobalt hydroxide initially. The company is in discussions with Entreprise Générale du Cobalt (EGC) for the supply of ASM material and a USA trading company to handle the marketing of its product in the USA. 

The venture could impact future cobalt market dynamics for several reasons.

Firstly, the plant could increase cobalt hydroxide capacity under DRC/USA ownership. Currently, cobalt hydroxide sourced from ASM production in the DRC is mainly refined by Chinese-owned assets, such as Huyaou Cobalt’s CDM operation. Most hydroxide produced from LSM material in the DRC is also processed by firms with links to China, such as CMOC, although Glencore remains the single-largest producer in the country. In January 2023, the USA, The DRC, and Zambia signed a Memorandum of Understanding (MoU) with intentions to facilitate the development of an integrated value chain for the production of electric vehicle (EV) batteries in the DRC and Zambia, ranging from raw material extraction to processing, manufacturing, and assembly of LIB. The partnership between the DRC and the USA in developing the refinery could suggest an early sign of more US-DRC cooperation.

Secondly, the move – like the introduction of EGC itself – could impact the way the cobalt market functions. ASM cobalt is an essential part of the cobalt supply chain. While there is always some production of ASM material irrespective of prevailing market conditions, ASM cobalt serves as the supply chain’s swing producer. Thus, levels of artisanal cobalt output rise and fall with demand and prices. Buenassa’s plant, and/or more state control of ASM output/processing might change the dynamics of ASM supply chains in the DRC.

Finally, the notion of a US-backed, DRC-owned plant prompts consideration of whether Western OEMs could become more comfortable with utilising ASM cobalt in their supply chains in future if new supply chains were forged. With the growing demand for cobalt in lithium-ion batteries, ethical sourcing of cobalt from ASM in the DRC has been a continuous concern for OEMs which, along with other factors, has prompted a shift away from cobalt-bearing cathode chemistries