DRC woes having limited impact on metals production

Metals producers in the Democratic Republic of Congo (DRC) have so far faced limited operational impacts from the Ebola and Covid-19 outbreaks and the conflict in the northeast of the country. But market participants have expressed concerns over operations in the coming months, as the number of coronavirus cases grows rapidly.

Miners could have to halt operations if Covid-19 cases are found in their mines. The DRC has over 4,000 confirmed cases of Covid-19, but the number is likely to be much higher because of low testing levels.

A recent outbreak of Ebola in Mbandaka, in the west of the country, has caused international concern. The outbreak is unlikely to impact metals-producing regions soon because of they are situated relatively far from Mbandaka.

Cobalt producers near the city of Kolwezi in Lualaba province have felt a slight impact on operations because of having to implement safer working practices, but they have not faced a full production halt.

Glencore, which runs the country's Katanga mine in the region, last month reduced its 2020 cobalt output guidance to 26,000-30,000t, down from 27,000-31,000t.

China Molybdenum's TFM mine was placed on a two-month quarantine in March, resulting in a one-day strike in May over pay. The dispute has been resolved.

Producers of tin, tungsten and tantalum in DRC have also reported a limited operational impact from Ebola and Covid-19, but have faced transportation problems, as transit routes from the country have been affected. The route to Tanzania's Dar es Salaam port was impeded by border closures between Rwanda and Tanzania, but it has since re-opened to freight. A lockdown in South Africa caused delays at the country's ports in April and early May, but ports have since allowed metals trade.

Fears over cobalt supply from the DRC have led to a rise in demand for cobalt products from Chinese buyers, with hydroxide producers reporting an increase in enquiries because of concerns over potential supply tightness. Cobalt hydroxide prices increased slightly to $9.80-10.70/lb on 2 June, from $9.80-10.60/lb on 12 May. Hydroxide prices have held firm at $9.80-10.60/lb since March despite a period of weak demand, mainly because of fears over DRC supply.