CMOC Hits Cobalt Targets Amid Record Low Prices and Market Challenges
Chinese mining giant CMOC Group, also known as China Molybdenum, recently reached its annual cobalt production target three months ahead of schedule. While this achievement may appear promising, the cobalt market is currently facing record-low prices, the lowest in eight years, amid economic uncertainty.
CMOC reported producing 84,722 tons of cobalt from its largely African operations by September 2024—a 127% increase compared to the same period last year and significantly exceeding their initial target of 60,000 to 70,000 tons. Despite these impressive numbers, the market is not witnessing increased demand, but rather the opposite. Factors like oversupply, fluctuating demand from the electric vehicle (EV) sector, and increased availability of substitutes like nickel and lithium have contributed to a steady decline in cobalt prices.
Industry analysts are questioning CMOC's aggressive production strategy in light of these falling prices. Some believe CMOC may be attempting to corner the market and influence future pricing. However, sustaining high production levels amidst declining profitability poses significant risks.
Geopolitical dynamics are also at play. China's relationship with the Democratic Republic of the Congo (DRC)—which accounts for over 70% of global cobalt supply—is crucial. Recently, DRC President Felix Tshisekedi called for a review of foreign mining contracts, seeking to reclaim more value from the nation's mineral resources. CMOC's operations are under scrutiny, with ongoing investigations potentially affecting their cobalt production and the broader global supply chain.
Global demand for cobalt has been primarily driven by the rise of EVs. However, slowing demand due to market saturation and the increasing use of alternative materials have put pressure on cobalt's value. Additionally, China's economic slowdown and reduced consumer spending are further impacting the market. Western nations are also increasingly focusing on sustainable and ethical sourcing, scrutinizing the environmental and labor practices in cobalt production.