China is ramping up its cobalt output despite a sharp dip in market prices for the mineral. A report by Reuters in January stated Chinese companies are expanding cobalt mining in China and Indonesia despite this, in a bid to raise market share of the EV battery metal.

The report stated that despite the price dip and oversupply, the companies are forging ahead in a market seen as vital to China’s EV industry. Some metals mined alongside cobalt, such as copper, are enjoying firmer prices.

Pricing company Fastmarkets said in January that whilst overall cobalt demand continued to grow in 2023, the rate of demand growth slowed. It put this down to weaker macroeconomic conditions and sluggish nickel-cobalt-manganese (NCM) battery demand. Uneasy over working conditions at cobalt mines in Congo, manufacturers have increasingly turned attention to lithium-iron phosphate (LFP) production in China.

It stated the uncertain economic outlook and continued growth of cobalt-free chemistries mean cobalt demand may remain lower than expected. But it sees the expanding output in the Democratic Republic of Congo (DRC) and Indonesia continuing and widening the surplus in the global cobalt market in 2024. “These market dynamics lead us to forecast bearish prices during the first part of 2024, with the average price for the year marginally lower than in 2023,” it said.

Cobalt prices dropped sharply in April 2022 when cobalt metal was trading at some $80,000 per tonne. It is currently changing hands on the London Metal Exchange at around $29,000 per tonne.

Fastmarkets added that falling cobalt prices may lead OEMs to reconsider lower nickel NCM batteries with higher cobalt content in certain markets. This could bring them cost savings. Although refined cobalt production will continue to grow outside China in 2024, it said, it is expected to be dwarfed by expansion in the Chinese refined cobalt industry.

Overtaking Glencore

China’s CMOC Group boosted its cobalt output by 144% during the first three quarters of 2023, according to the Reuters report. It is now on track to become the world’s biggest cobalt producer, overtaking commodity group Glencore, it stated. Its market share should lift from 11% in 2022 to almost 30% by 2025.

Its Kisanfu mine in DRC is part-owned by Chinese battery maker CATL. Analysts said CMOC was likely in receipt of Chinese government subsidies.

When it acquired Kisanfu in 2020, CMOC vice chairman and chief investment officer, Steele Li, said the copper-cobalt asset would solidify its leading position in cobalt and EV materials.

One line of thinking among analysts is that it is seeking to flood the cobalt market in an effort to control a larger market share and oust marginal producers. CMOC was asked for comment but did not reply by the time BEST went to press. A company spokesperson told reporters in December: “The growth of cobalt supply has to some extent dispelled downstream concerns about (its) sustainability. Our cobalt products are mainly sold through long-term contracts and are not subjected to short-term market fluctuation.”

China’s MMG Group and Jinchuan Group International Resources have both also expanded mining output in Congo, the report stated.

DRC has pressurised miners to ramp up output to maintain the millions of dollars it receives each year in mining royalty and tax payments, analysts said. Presidential elections were held in December, another factor in maintaining production, they added. President Felix Tshisekedi was declared the winner.

Last November, investment bank Morgan Stanley reportedly put international supplies of cobalt at over 300,000 tonnes per year and demand at some 170,000 tonnes. Supplies of refined cobalt are likely to exceed demand by 74,800 tonnes in 2024 and 92,660 in 2025, it said.

Cobalt production in Indonesia is also set to soar in coming years. A large number of nickel projects are being established there, and they have cobalt as a by-product. According to the Project Blue consultancy, total output there is seen surging at least four-fold by 2033.

In January, Swedish battery maker Northvolt said it was looking to source cobalt from DRC. It currently buys cobalt from Australia and elsewhere.