It was a bittersweet 2019 for Eurasian Resources Group’s Democratic Republic of Congo (DRC) interests. A change of the guard in government, a new Mining Code and a decrease in global cobalt prices have all impacted its operations.
Still, the company remains firmly committed to investing in its cobalt interests in the country. GERARD PETER reports.
Since acquiring Eurasian Natural Resources Corporation in 2013, Eurasian Resources has focussed on ensuring that Africa is a key driver for the company’s future international growth, with a particular emphasis on the DRC.
Read more about mining in central Africa
This includes its flagship Metalkol Roan Tailings Reclamation (RTR), a major tailings reprocessing operation. At full capacity Metalkol RTR will produce 24ktpa of cobalt – enough to power more than three million vehicles per year.
With responsible mining top of mind in battery metals circles, Eurasian Resources has initiated a blockchain solution aimed at enhancing traceability in the cobalt supply chain.
The solution will help to ensure a responsible supply chain for lithium-ion batteries, including ensuring there is no use of illegal material, child labour and other poor standards.
As a further testament to its commitment to responsible mining, in August the company released Metalkol inaugural performance report.
Envisaged to be released annually and with third-party validation, the report forms part of the Eurasian Resources’s efforts to comply with globally recognised supply chain guidance stipulated in the Clean Cobalt Framework, developed by the Organisation for Economic Co-operation and Development (OECD).
Price crunch and challenges
The brakes have been put on Eurasian Resources realising much of its expansion plans in the DRC – largely as a result of the new Mining Code which has slapped a 10% levy on cobalt exports.
At the end of February, Eurasian Resources temporarily shut one of its Boss Mining assets, placing it on care and maintenance while it completes a feasibility study on the construction of two new processing facilities to treat ores at the site.
In addition, a global supply glut of cobalt has resulted in declining prices. According to CEO, Benedikt Sobotka, at the current price, between 20-30% of global cobalt mine supply is at risk of disappearing in 2020.
“After a spectacular 2018 where prices averaged in excess of US$35/lb, principally as a consequence of strong demand growth from the lithium-ion battery industry, Fastmarkets MB’s standard-grade/low assessment – the international benchmark price – fell throughout 2019 until early August,” he explains.
“Since then, the industry benchmark price has gained by almost 30%. Some attribute this to multiple curtailment announcements among miners, both in the DRC and elsewhere.
"Yet, in reality, signs of imminent recovery in cobalt prices were evident by mid-July – when both Chinese domestic metal prices, and hydroxide payables, started to rise; and the reason was mining costs.
"Some of this will be replenished with ramp-ups at major industrial projects, but not enough to close the gap. Some may be supplied by existing stockpiles, but these are held in stable hands and will fall to critical levels over the course of 2020.”
He adds that in order to regain lost supply in the short-term, a sustained price in excess of $15/lb is needed. In the long-term, $20/lb and above is required to attract much-needed capital to the industry.
DRC still a key focus
Given price declines and new challenges as a result of the new Mining Code, it is trying times for Eurasian Resources in the DRC.
However, Luke Mumba, head of community and responsible mining development says that the country remains an integral part of the company’s international operations and that it is important that it is engaged with all stakeholders in the country.
“While there are challenges, we understand the need for the changes that have taken place.
“However, at the same time one needs to understand that investing in mining is a slow process that demands time and plenty of resources and we plan our operations on the assumption that there is stability in the country and that it is not an ever-changing environment,” he concludes.