Good article RDL - I think some of you may have missed this one last week too from FT. (see the article copied below in bold italic)
DRC govt has told Glencore to stop working on the plant that will hopefully take the uranium out of its cobalt from kamoto mine (3rd biggest in the world) .( Thats about 20,000 tons a year off the market for the time being -although being stockpiled) Then now comes the statement that Glencore have got rid of moany of the expats at their Mutanda mine (the biggest in the world 27,000 tons last year) Mutanda was reckoned to have another 15 years mine life now Glencore is saying that Mutanda as a whole is "under review following drilling results that showed a faster-than-expected transition to a new type of metal bearing ore.To process this material — and give Mutanda a mine life of 15 years — Glencore would need to invest heavily in new processing equipment.
If, for whatever reason, they decide to not proceed with the big investment to continue Mutandas cobalt production over 2 years and those reasons could be as follows: :
1. low cobalt, complicated metals making it less viable to make the big new investment.
2. Glasenburg resigning to retuire and it was all his baby in congo -so mabe the new guys comming in want to make their own story for the company.
3. the crap Glencore in about their congo financials and illicit payments with UK/US ?swiss authorities taking them to court
4. lack of confidence in investing more in DRC at the moment,
5. or the fact that it could well be that the Chinese are paying the new guys the funded into power to boot glencore out-
6. the new tax and working environment making it less viable
-or ll of the above:
That's means the 2 mine that produced 40% of the world's cobalt last year up the Swanee for a few years till the Chinese take them over. we'll surely have to see some effect on the market soon no?
To be honest - the current friendless cobalt price right now, and the speed of the drop has confused me, and the traders I know, Indeed it totally confuses me given the fundamentals - It has to be in the bottom of a trough now. -hopefully a U trough?. I mean how low can it keep going given the continuing demand and falling off supply and still no real substitute anywhere in sight?
how much longer must we be long and wrong? I agree, as pessimistic and I feel about it now It cant be much longer....Even I'm beginning to hate it ....which reminds me.... Buy em when you hate 'em - sell 'em when you love 'em!!......
Glencore’s subsidiary in the Democratic Republic of Congo has warned cobalt sales may be affected after it became embroiled in a spat in the country that has some of its more important growth projects. Katanga Mining said it had been told by the DRC government to suspend a project to build a new system to remove uranium from its cobalt supplies. “On January 30 2019, the company’s 75 per cent operating subsidiary Kamoto Copper Company received a letter from the DRC minister of mines following the inspection conducted by the DRC government in the fourth quarter of 2018,” Katanga said in a statement. “The minister of mines raised certain concerns with the technical solutions identified by KCC and requested that KCC suspend the project to build an Ion exchange plant until further notice. KCC intends to engage with the ministry of mines to understand and address their concerns.” Katanga’s Kamoto mine in the DRC is one of the world’s largest producers of cobalt, an important battery metal. Glencore shocked the market in November when it revealed the discovery of uranium meant it could no longer export cobalt from the country. It said metal would be stockpiled until an Ion Exchange system was built to remove the uranium, which is expected to be completed by May next year. While Katanga still expects to produce 26,000 tonnes of cobalt this year, the company said on Friday that it expected to sell most of that metal in 2020. “This will mean that the majority of the Katanga cobalt sales will now likely occur in 2020; at spot prices this will defer around $650m of revenue into next year,” said Tyler Broda, analyst at RBC Capital Markets. Subject to obtaining the necessary authorisations it expects to commission the Ion system in the fourth quarter. Glencore has been grappling with a series of problems in the DRC, including a tough new mining code and a US Department of Justice investigation into its activities in the country. Katanga, meanwhile, was fined by Canadian regulators in December after it was found to have issued misleading financial statements. The Ontario Securities Commission also ruled that Katanga had failed to disclose its relationship with Israeli businessman Dan Gertler, who has been sanctioned by the US for his “opaque and corrupt mining and oil deals” in the DRC. Separately, Glencore issued a production report on Friday that made passing reference to its latest problem in the DRC. The report also showed its total copper production had risen 11 per cent to 1.45m tonnes, primarily because of the restarting of processing operations at Katanga — which is also a major source of copper — in late 2017. Cobalt production was up 54 per cent in 2018 to 42,200 tonnes, again largely because of Katanga. Zinc production was flat while coal production rose 7 per cent to 129.4m tonnes. Glencore’s adjusted net debt at the end of December would be $2bn higher as lower prices and trading volumes hit its oil trading unit, according to RBC. “This should not be a material issue either way going forward. We wouldn’t expect this to impact any potential buyback or cash return with double-digit free cash yields going forward,” said Mr Broda.
CLA Price at posting:
5.4¢ Sentiment: Buy Disclosure: Held
(20min delay)
