China Molybdenum (CMOC) will invest US$2.51 billion to expand production capacity of its Tenke Fungurume mine (TFM) in the Democratic Republic of Congo (DRC). In July, the company started trial production from a 10k expansion at another site in the mine. (Earlier post.)
The expansion project, which is expected to be online in 2023, will include construction of three ore production lines which will add a total 12.4 millions tonnes per year processing capacity of copper-cobalt ores, including 3.3 Mtpy for oxidized ores and 9.1 Mtpy for mixed ores. This is estimated to expand the mine’s average annual copper output by 200,000 tonnes and cobalt output by 17,000 tonnes.
Metals analyst Roskill noted that there is a growing trend for DRC miners to transition from open-pit mining to underground mining, from oxidized orebodies to sulfide orebodies to unlock the resource potential and extend the mine life.
While TFM’s 10K expansion project focuses on processing oxidized ores, the new mixed ore project targets deeper at the transition zone between oxidized ore and sulfide ore reserves.
Underground mining can be more costly than open-pit mining, owing to higher capital investment and mining costs. In the case of the DRC, as the mines get deeper, the copper-to-cobalt ratio would typically rise, reflecting increased copper grades and lower cobalt grades. Roskill believes that this would raise the entry barrier for junior cobalt miners both economically and technically in the coming years.
As a result, the DRC cobalt sector is likely to become more dominated by existing large-scale producers, moving towards an oligopoly in the near future: by 2025, the top three cobalt miners in the DRC could potentially supply over half of the market. Considering the strong demand outlook for cobalt and the increasing costs to mine the material, Roskill expects to see limited downside in cobalt prices in the short to medium term.—Roskill