[SMM special topic] Cobalt production to 10,000 tons! Chemaf challenges the hegemony of Glencore Cobalt Industry

SMM11 16-2018 is not a comfortable year for mining giant Glencore.

(real scene of Gecamines Plant, State-owned Mining Company of the Democratic Republic of the Congo)

After three lawsuits, Glencore's Kamoto Copper Company subsidiary in the Democratic Republic of the Congo (DRC) has been in trouble. At the same time and in the same place, a cobalt company based in Lubumbashi, Congo, supplied 5200 tons of cobalt in 2017 and is expected to increase to 7000 tons in 2018.

Chemaf: Copper and Cobalt Resource-based Mining Enterprises

Chemaf S.P.R.L, a wholly owned subsidiary of the Shalina Group, was registered in the Democratic Republic of the Congo by Shiraz Virji, Chairman of the Shalina Group, in 2001. It is Shalina Resources Ltd.. A wholly owned subsidiary of Shalina Resources Ltd. Is a private company registered in Dubai and wholly owned by the Shalina Group.

The company is deeply rooted in the Democratic Republic of the Congo (DRC) and belongs to copper and cobalt resource-based mining enterprises. The Democratic Republic of the Congo (DRC) has 10% of the world's copper and 60% of cobalt resources. As a mining company specializing in exploration, exploitation and smelting, the company has all the mineral resources locally in the Democratic Republic of the Congo (DRC). Among them, the grade of copper in ore resources is about 1.88%, which is higher than the global average of 0.7%. The main products produced and sold are all cathode copper and cobalt.

Chemaf: mines, five smelters, three.

In terms of mining resources, Chemaf owns five major mines: Etoile Mine, Etoile Extension, Mufunta, Luisha (Kanshishi and Kansongwe) and Mutoshi.

(Chemaf Mine reality)

1. Etoile Mine has ore resources as high as 17.66 million tons, of which copper grade is 2.55% and cobalt grade is 0.35%. The mine has 577 mining rights, also known as Kalukuluku orebody; Chemaf was awarded exploration and exploitation rights in and around Etoile in 2003. Etoile mainly produces copper, cobalt oxides and sulfides, with ore resources of up to 17.66 million tons, of which copper grade is 2.55% and cobalt grade is 0.35%.

2. Etoile Extension has ore resources of 3.17 million tons, copper of 0.31% and cobalt of 0.66%. The mine has 1538 mining rights, which is only 1.5km northeast of Etoile mine. It is a shallow orebody with a length of 300m and a width of 150m. Although the copper grade of the deposit is low, cobalt ore is expected to be consistent with Etoile ore, with ore resources of 3.17 million tons, copper of 0.31% and cobalt of 0.66%, which have extensive exploration potential.

3. Mufunta has ore resources of 1.22 million tons, copper of 1.71%, cobalt-free resources: the mine has 12113 mining rights, located 9 km southeast of Etoile Mine, is a mechanized open pit, the mineral products are oxides. In July 2012, AMC audited the drilling work of Mufunta, which did not contain cobalt resources, but it had 1.22 million tons of mineral resources and a copper content of 1.71 per cent.

4. Luisha merged Kanshishi and Kansongwe mines. The mine, which has PE2603 mining rights, was first mined by Union Miniere du Haut Katanga in 1913 and is located 75 km northwest of Lubumbashi. In terms of reserves: Kanshishi has 300000 tons of mineral resources, a copper grade of 1.95 per cent and a copper grade of 1.43 per cent.

5. Mutoshi contains various copper and cobalt deposits in Kolwezi Klippe and has about 300000 tons of cobalt resources. The mine has the mining rights of PE2604, PE2756, PE4613 and PE2350. The mine was first developed as a gold deposit in 1903. The cobalt resource is about 300000 tons, which provides a rich resource reserve for Chemaf.

Five major mine resources:

(source: Xingye Securities, the company's official website)

In the middle reaches of the smelting project, Etoile Production Plant and Usoke Production Plant, are mainly included and a new Mutoshi smelting project of 20, 000 tons of copper and 16000 tons of cobalt is being planned.

1. Based on the mature development technology of Chemaf in its Usoke smelter, Etoile Production Plant: has invested US $128 million in purchasing new equipment in Etoile smelter. It began to produce cathode copper in October 2016 and cobalt hydroxide in February 2017. The Etoile mining complex and processing plants are also a source of confidence that Chemaf is determined to become one of the world's leading producers of responsible cobalt procurement. At present, the annual production capacity reaches 23800 tons, of which 20, 000 tons of cathode copper and 3800 tons of cobalt hydroxide salt.

2. The Usoke Production Plant: Usoke plant, which was first put into operation in 2002, represents the primary processing plant of Chemaf, located 3 km east of the central business district of Lubumbashi and about 8 km west of the Etoile mining area. At present, the annual production capacity reaches 33900 tons, of which 31500 tons of cathode copper and 2400 tons of cobalt salt, copper and cobalt raw materials from Etoile and Luisha.

3. 2018 new smelting project-Mutoshi Production Plant: relies on Mutoshi to have 300000 tons of cobalt resources. Chemaf began to develop a processing smelter in the region in 2018, with a planned annual production capacity of 36000 tons, including 20, 000 tons of copper and 16000 tons of cobalt. According to online news rumors, the smelter will be officially put into production in September 2019.

(real scene of Chemaf processing plant)

Situation of middle stream smelter:

(source: Xingye Securities, the company's official website)

Chemaf: plus horsepower wants to enter 10,000 ton production capacity

According to Societe Generale Securities statistics, since the establishment of Chemaf, production capacity continues to expand. The company continues to maintain a stable record of investment in quality infrastructure and upgrading technology in order to improve production efficiency. For example, the company invested $128 million in new equipment at the Etoile smelter, which began producing cathode copper in October 2016 and cobalt hydroxide in February 2017. The production capacity reached 23800 tons / year, including 20, 000 tons of cathode copper and 3800 tons of cobalt hydroxide salt. More importantly, Chemaf began developing a new Mutoshi processing smelter in 2018 with a planned annual production capacity of 36000 tons, including 20, 000 tons of copper and 16000 tons of cobalt.

Chemaf capacity over the years:

(source: Xingye Securities, the company's official website)

In 2017, the output of copper and cobalt reached 27900 tons and 5160 tons. Benefiting from the construction and commissioning of the Etoile smelter, in 2017, the company's copper production reached 27900 tons, an increase of 50 percent over the same period last year, and cobalt production increased to 5160 tons, an increase of 222.5 percent over the same period last year.

In recent years, the actual output data of Chemaf copper and cobalt:

(source: Xingye Securities, the company's official website)

From the upstream mine to the middle reaches of the smelting integration layout strategy, and the production capacity is in the continuous expansion: the company currently has five major mine resources, is expected to have 382700 tons of cobalt resources reserves; At the same time, in the middle of the smelting, there are 2 smelting and processing plants in production and 1 smelting and processing plant under construction. At present, the copper smelting capacity will reach 51500 tons, and in the future, it may be expanded to 71500 tons; at present, the cobalt smelting capacity will reach 6200 tons, and in the future, it may be expanded to 22200 tons.

Three-year Cobalt hydroxide off-take Agreement between Chemaf: and Trafigura Group

In early April, Trafigura, a commodities trader, said in a statement that it had signed a three-year cobalt hydroxide off-take agreement with Shalina Resources and its subsidiary Chemaf in the Democratic Republic of the Congo. The agreement will last until December 2020. Jeremy Weir, chief executive of Trafigura, said, "if forecasts for a surge in the proportion of growth in electric vehicles from 2025 come true, there is no doubt that global demand for nickel and cobalt will also grow dramatically. This provides a very favourable environment for Trafigura's growing cobalt and nickel trading activities.

(real situation of Trafigura Group)

It is reported that Singapore Trafigura Group (Trafigura Pte Ltd), founded in 1993 and headquartered in Singapore, is a Singapore private multinational commodity trading company that deals in base metals and energy, including oil. Trafigura is the world's largest private metals dealer and the world's second largest private oil dealer (after (Vitol Group of Companies).

SMM predicts that the global supply of cobalt raw materials will remain in excess of demand in 2019

According to SMM statistics, the global cobalt raw material supply is expected to be 146700 tons in 2018, the demand is expected to be 129000 tons, and the supply surplus is 17700 tons. The global cobalt raw material increment in 2018 mainly comes from Glencore's Kamoto copper-cobalt ore, Tenke copper-cobalt ore, RTR copper-cobalt ore, PE527 copper-cobalt ore, Mikas copper-cobalt ore, medium color Deziwa copper-cobalt ore. SMM expects global cobalt to remain in excess of demand by 2020, peaking in 2019. SMM expects the global supply of cobalt raw materials to exceed demand in 2019.

Source of data & thanks:

Chemaf official website

Follow-up report of Societe Generale Securities Industry