Glencore warns of cobalt surplus amid DRC export ban

[Redator]

Glencore (LON: GLEN), the world’s second-largest cobalt producer, warned Wednesday that a significant portion of its cobalt output may remain unsold by the end of 2025 due to ongoing export restrictions in the Democratic Republic of Congo (DRC).

The DRC, which supplies the bulk of the world’s cobalt, imposed a four-month export ban in February after prices hit a nine-year low. In June, the government extended the ban by another three months, aiming to curb oversupply and buy time to develop a quota system for distributing export rights among mining companies.

“The extension of the export ban is expected to significantly tighten cobalt availability and accelerate inventory drawdowns, providing support to prices,” Glencore said in its first-half results.

The Swiss miner and commodities trader said it is stockpiling all cobalt production from its DRC operations and has declared force majeure on some deliveries earlier this year. While Glencore did not disclose the size of its cobalt stockpile, it said it remains conservative in its assumptions, projecting no material financial impact even if no sales occur in 2025. Any resumed exports would be considered an upside.

Despite the export ban, Glencore’s total cobalt production climbed 19% year over year to 18,900 metric tonnes. The company raised its 2025 production forecast to between 42,000 and 45,000 tonnes, up from 38,200 tonnes in 2024. In total, Glencore mined 35,100 tonnes of cobalt last year at its Congo sites, where the metal is typically extracted as a byproduct of copper mining.

Cobalt prices collapsed to record inflation-adjusted lows in January, hammered by surging supply from Congo and sluggish demand from the electric vehicle sector, which has eclipsed aviation and aerospace as the leading consumer of the metal.

Agribusiness’ future

Glencore also hinted on Wednesday it may eventually divest its 16.4% stake in Bunge Global, the newly formed agribusiness giant born from Bunge’s $34 billion merger with Glencore-backed grain trader Viterra.

“The agriculture business is not necessarily consistent with our business model,” chief executive officer Gary Nagle said in a webcast on Wednesday following the earnings release. “Having a 16.4% shareholding in Bunge is probably not something that would be for Glencore in the long term.”