Cobalt prices have reportedly taken a nosedive, putting a strain on the Democratic Republic of Congo’s economy. As such, the economic growth of one of the world’s poorest countries is likely to fall to 4.3% this year from 5.8% in 2018. This was partly due to lower cobalt prices, according to the International Monetary Fund.
The DRC produces well over 60% of the world’s supply of cobalt, a metal that is used in lithium-ion batteries for smartphones and electric cars. Last year the country’s former president Joseph Kabila declared the metal “strategic” and launched new regulations that require miners to pay 10% of their revenues on sales of the metal to the state.
However, having reached a 10-year peak of over US $40 a pound in early 2018, prices have since sunk back to about US$14 a pound, according to media statistics. The market has been overwhelmed by a surge in supply of the metal from the DRC, especially from small-scale individual miners who dig up the metal by hand and who react quickly to higher prices, according to traders.
This has resulted in large stockpiles of cobalt currently sitting in the port of Durban the metal to Chinese buyers. A cut in subsidies to electric vehicle producers in China this year has also reduced demand for batteries in the world’s largest car market, they said. Small-scale miners in the DRC have begun to reduce their activities, or have started to mine for copper instead, according to Darton Commodities. They estimate cobalt supply from small-scale miners has fallen 70% from a year ago, to well under 5,000 tonnes.
The DRC government is also looking to better regulate the informal mining sector, following regular deaths and injuries. Last week the army was sent to clear small-scale miners from one of the largest copper and cobalt mines, Tenke Fungurume, according to media reports.
