[SMM Analysis] ERG suspension of Cobalt production in Chambishi has limited boost to Cobalt Price

SMM2, 15 March: recently, according to foreign media reports, Chambishi Metals Company Chambishi Metals Plc has ceased operations, and more than 1500 full-time employees have been on leave indefinitely since February 13, 2019. the company's full-time employees have been on leave for an indefinite period of time since February 13, 2019. In addition to full-time employers, hundreds of part-time workers, temporary workers and contractors have also been affected. Chambishi Metals said it had been forced to stop production because it failed to obtain production materials from other companies in the Democratic Republic of the Congo. "Click to view the original text of the foreign media

Eurasia Resources is a global important diversified natural resources manufacturer, such as copper, cobalt, ferroalloy, alumina and electrolytic aluminum. With more than 20 years of experience in global resource production and asset development projects, the company has revenue of US $5.048 billion in 2017. According to relevant information, Eurasia Resources is located in the Congo Gold Metalkol Roan Tailings Reclamation (RTR) tailings recovery project put into operation and produce the first batch of copper products. According to the design, the first phase of the project will produce 77000 tons of electrolytic copper and 14000 tons of cobalt hydroxide each year, which means that Metalkol will change from an abandoned tailings pile to one of the largest cobalt mines in the world. ERG will also establish itself as the top three cobalt producers in the world.

On November 6, 2018, during the first China International Import Expo, Eurasian Resources CEO Benedikt Sobotka said in an interview that Eurasian Resources had benefited from China's "Belt and Road Initiative" initiative. "with this initiative, The Group cooperates with Chinese enterprises on a number of overseas projects. Eurasian resources mainly supplies ferrochromium, copper and cobalt to China, which is an important sales market for Eurasian resources, accounting for 20% to 25% of the group's total sales. According to him, the Metalkol RTR copper and cobalt project with Eurasian resources in the Democratic Republic of the Congo is expected to be fully operational in 2019, when the annual output of copper and cobalt will reach 105000 tons and 24000 tons respectively. Most of these copper and cobalt mines will be sold to the Chinese market for battery manufacturing and can support the production of more than 3 million new energy vehicles a year.

This time, Eurasian resources suspended the production of copper and cobalt in Chambishi, which SMM believes will have a limited impact on cobalt prices. At present, there is a significant oversupply of cobalt raw materials in the world, which is a buyer's market, and the market transaction is still dominated by short orders. According to SMM, due to the excessive difference between internal and external prices, the profits of domestic smelters have been seriously damaged. This year, more promotion of the brand-new long single bargaining mode, foreign media cobalt quotation monopoly raw material price situation or ushered in a change. In addition, 5 per cent of the tax is on concentrate imports, and with the production of cobalt intermediates in the Eurasian Resources RTR project, the impact of the tax will be eliminated, and it is highly likely that Chambishi will resume production.

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