Spotlight Round-up: 16th July 2021

16th July 2021

 

 

Artisanal cobalt mining in the DR Congo is on our radar here this week, with the new state buyer, Entreprise Generale du Cobalt (EGC) announcing on the 12th of July that it will likely start buying cobalt within eight weeks.  The EGC has selected Kasulo as the site of the first trades, with a goal of buying 7,000 tonnes of cobalt hydroxide from the local artisanal and small-scale miners (ASM).  This will increase to 15,000 tonnes next year, and 20,000 tonnes in 2023.  ASM production in the Congo is the second largest source of cobalt in the world, producing around 9,000 tonnes last year, trailing only the same country’s industrial production, which is run by companies like Glencore as a byproduct of copper production at its Katanga and Mutanda mines.

ASM production will be subjected to new regulations as part of selling to the EGC.  The body will approve sites where tunnelling will be banned, pits will be limited to 10 m in depth and miners will have to wear PPE and use a site-specific identity card. These policies come as an enforcement of one of the primary purposes of the EGC, which is to improve safety and working conditions for artisanal miners in the Congo.  As it stands, the main buyers of cobalt produced by the small-scale operations are Chinese outfits that have a poor track record of enforcing safety and environmental measures on their operations.  The first site, Kasulo, is currently operated by Congo Dongfang Mining, a division of China’s Zhejiang Huayou Cobalt.  The EGC is aiming to bring up the standards of safety and environmental protection for ASM producers.

Artisanal cobalt mining in the DR Congo
Artisanal cobalt mining in the DR Congo

The EGC will be the only legal buyer of cobalt in the Congo after the programme rolls out nationally.  At the pilot site, cobalt ore will be processed locally into cobalt hydroxide, using existing facilities nearby.  The EGC will also institute a price floor of $30,000 per tonne to protect the incomes of ASM workers in times of low prices.  This is a useful policy, since cobalt has experienced some longer-term price volatility in spite of its general ascent as the battery metals market, for which it is essential, has taken off.  The price is currently hovering in the region of $50,000 per tonne, barely half of the almost $100,000 per tonne it was bringing in in 2018.  This kind of price fluctuation has serious effects on ASM producers, who not only rely on the international price for their incomes, but are subject to the wiles of shady middlemen who currently act as buyers.

The EGC will partner with commodities trader Trafigura, who have signed a five-year deal to provide pre-financing for up to 45,000 tons of cobalt.  The deal allows the EGC to market up to 50% of the cobalt to other buyers, and the EGC will also put aside 3% of its revenues, or 5% if the cobalt price is over $50,000 per tonne, into a fund that will support prices for miners should the price go below $30,000 per tonne.  These moves will hopefully support not just individual miners, but also the country as a whole.  As it stands, the government misses out on tax revenues for the vast majority of artisanally mined cobalt, which bypasses normal government systems when it is sold to middlemen.  Making the EGC the sole buyer will help the government capitalise on the potential for cobalt sales to explode with the advent of new battery technology, which will be a major boon in a poor country.  Additionally, it will enable the global supply chain, which is concerned about human rights and environmental transgressions in the artisanal cobalt market, to buy artisanal cobalt with more confidence.  The EGC was supposed to start buying cobalt months ago, so let’s hope that the eight week timeframe is for real and that the system works to improve conditions in this dangerous industry.

Around the Traps

Goldplay Mining (TSXV:AUC) has received a BUY rating and a fair value of $0.38 (compared to its current price of $0.17 on the TSXV) from Fundamental Research in their first analyst coverage. You can access the analyst report here to find out more about this busy junior.  For information about Goldplay’s new Portuguese acquisitions, you can check out my piece in the current issue of Prospector magazine here.

Still on Goldplay, you can join a very interesting webinar on the topic of Why you should take gold more seriously, hosted by Sid Rajeev from Fundamental Research and joined by Catalin Kilofliski, CEO of Goldplay.  He will be providing insights on the company’s Canadian and Portuguese projects, and you can register for the webinar here.

If Goldplay has whetted your appetite for Canadian juniors, have a look at this piece now up on the Spotlight website.  It takes a look at Mountain Boy’s (TSXV:MTB) polymetallic Theia project in British Columbia’s Golden Triangle.

Mountain Boy's Theia project in relation to others in the Golden Triangle
Mountain Boy's Theia project in relation to others in the Golden Triangle

There’s more from me in this week’s fresh Prospector magazine, including the cover story!  Check out page 4 for my look at Digbee’s ESG tool and why ESG is essential for modern juniors, or have a look at my piece on Conquest Resources and their flourishing Belfast Teck-Mag project, also in Canada.
That’s all for this Friday, have a great weekend everyone!

Jane Lockwood

View posts by Jane Lockwood
Jane Lockwood is an Australian geoscientist living and working in Germany. She holds a Master's of Earth Science (Advanced) from the Australian National University and has spent several years reporting on the junior mining industry for Spotlight Mining, as well as conducting social media management for junior mining companies.