On the lookout, Trafigura would seek to invest in the Congolese cobalt sector

Unlike many other operators, who have been hit hard by low cobalt prices, raw material specialist Trafigura may soon strengthen its commitments in the Congolese sector.

For the Swiss giant, you have to know how to invest on the counter-cycle. According to indiscretions leaked on Monday, October 14 by the financial daily Financial Times, the trader is the leader of a consortium that could invest up to $450 million in the construction of a copper and cobalt processing plant in the DRC, near the Mutoshi mine in Katanga. The site is owned by Chemaf, the Congolese subsidiary of Dubai-based Shalina Resources, which is Trafigura’s main supplier of cobalt. The decision to invest, if confirmed, comes at a time when cobalt prices are still far from their annual highs, which suggests that the Swiss firm is betting on a future market recovery. As a reminder, the other Swiss giant in the sector, Glencore, decided in August to suspend production at its Congolese site in Mutanda, one of the world’s largest cobalt mines, by the end of the year, precisely because of the sharp drop in ore prices. Since then, cobalt prices have rebounded by 45% to $17.7 per pound, which seems to support Trafigura’s « bottom-of-cycle » positioning strategy.

In fact, cobalt remains more strategic than ever, as ore is used in the manufacture of electric batteries (smartphones, tablets, electric cars, etc.). The teams of the specialized firm Benchmark Minerals Intelligence forecast that demand for lithium ion cobalt batteries will increase from 75,000 tonnes in 2019 to 152,000 tonnes in 2024, a doubling in five years. Solid prospects that have obviously not escaped Trafigura’s notice.

Year-to-date cobalt prices (Price in thousands of dollars per tonne)
Source : London Metal Exchange