A $600m mining deal will expand the DRC’s output of copper and cobalt at a time of rising demand as world transitions to electric vehicles.
A massive $600m financing agreement between Shalina Resources, one of the largest producers of copper and cobalt and Trafigura Pte. Ltd. one of the world’s leading independent commodity trading companies, is set to considerably increase supplies of high grade cobalt hydroxide and copper from the Democratic Republic of the Congo (DRC) and in the process, generate much needed revenues for this giant Central African country.
Demand for these metals, particularly for cobalt which is an essential component of batteries used in mobile phones and increasingly in electric vehicle batteries has been rising steeply, with demand outstripping supply.
According to analysts, global refined cobalt production is expected to reach 223,000 tonnes in 2025, a rise of 38.5% from 2021. The DRC is the world’s largest supplier of cobalt, producing around 70% of the metal.
The financing agreement amounting to $600m, will enable Shalina Resources, through its operational DRC subsidiary, Chemaf, to complete construction of the fully mechanised Mutoshi mine and the solvent extraction-electrowinning (Sx-EW) processing plant in Kolwezi. It will also enable the expansion of the Etoile SX-EW processing plant in Lubumbashi. All sites are in DRC’s Katanga Province.
The agreement also covers the marketing by Trafigura of all the cobalt hydroxide produced from these assets operated by Chemaf.
The expansion in output will come as a very welcome development for the giant Central African country’s economy which depends heavily on mining for its foreign revenues. It will provide much needed revenues in royalties, duties and income tax.
Equally significantly, it will create local employment during the construction phase of the Mutoshi mine as well as during the operation phase with up to 1,000 jobs. In addition, the current local employment of around 1,000 Congolese at the Etoile mine will be secured for an additional 10-12 years.
The Mutoshi mine, one of the largest cobalt and copper mines in the DRC with significant resource development upside, is now expected to be producing by the third quarter of 2023.
The new production will make Chemaf one of the largest cobalt producers globally at a time when demand for batteries for electric vehicles and copper for increased electrification as part of the energy transition is growing exponentially from customers across the world.
Over the decades that Chemaf has operated in the DRC, it has gained a solid reputation as an excellent manager of social and environmental impact. Its CSR, which includes high level training of locals, building schools, aces of worship and dispensaries, laying roads and bridges to ease local transportation and supporting local market agriculture for its workers has made it a standout employer in an industry that has often been criticised for its attitude to workers and the local environment.