According to a Reuters article, depleting ore grades at Glencore's Mutanda mine in the DRC means the mining giant will produce up to 15% less a year of the battery metal. 

According to a Reuters article, depleting ore grades at Glencore's Mutanda mine in the DRC means the mining giant will produce up to 15% less a year of the battery metal. Reuters cited “…three sources with knowledge of the matter” who claimed that the problem at Mutanda is shrinking oxide ore deposits on the surface. 

Mutanda is an open-pit copper mine that uses conventional truck and shovel mining methods. It is the largest cobalt mine in the world and its measured minerals resources are 371Mt grading at 1.39% Cu and 0.55% Co.

The mine has general facilities for crushing and milling on-site to produce a Cu-Co concentrate, including a dense media separation concentrator and a hydrometallurgical plant. The concentrate is further processed at the Mutanda Plant to produce cobalt hydroxide.

The mine was operating roughly at capacity between 2016 and 2019 and cobalt output averaged 25,200tpy over this four-year period. However, in November 2019, Glencore put Mutanda on care and maintenance due to increasing costs, low cobalt prices, and higher taxes. Operations were restarted in Q4 2021, and the mine produced 14,700t of cobalt in 2022. Q1-Q3 output in 2023 was 8,300t, implying an annual production of around 11,000t.  

Glencore renewed three mining permits for Mutanda in 2022 for an additional period of 15 years which caused it to transfer 5% of its equity in Mutanda Mining to the DRC government in accordance with the DRC Mining Code. The Reuters article suggests that Glencore is undertaking a feasibility study to assess the viability of going underground at Mutanda.

When technical issues are considered alongside today’s low cobalt prices, it makes some sense that Glencore lowers output at Mutanda. Cobalt intermediates remain in oversupply, but low prices haven’t killed off the ramp-up of new supply in this by-product market, with Indonesia upping output and new supply from CMOC’s Tenke expansion and Kisanfu project in the DRC adding to the supply glut. 

In August, Glencore said that it had “stockpiled” cobalt in H1. Like many producers, Glencore was likely having to build up inventory in an oversupplied market. 

Further increases to intermediate cobalt supply will follow whether or not Glencore takes material out of the market. In recent months ERG has broken ground on a hydrometallurgical plant at COMIDE whilst MMG’s Q3 2023 production report indicated that the company has completed the mechanical construction of its cobalt plant at the Kinsevere Expansion Project. We expect intermediate to be in surplus from time to come unless major players take significant units out of the market.