Swiss mining giant Glencore announced that it will halt production at the Mutanda Mine, the world’s largest cobalt mine, at the end of the year.
The company said that the mine in the Democratic Republic of Congo is no longer economically viable in part because of falling cobalt prices.
The Financial Times reported that in a letter to employees, the company stated, “Unfortunately due to the significant decrease in the cobalt price, increased inflation across some of our key input costs (mainly sulfuric acid) and the additional taxes imposed by the mining code, the mine is no longer economically viable over the long term.”
It is yet another setback for the company following scrutiny of its relationships with Israeli businessman Dan Gertler and the imposition of higher taxes under a new mining code that was signed into law last year.
The price of cobalt has fallen more than 40 percent this year because of a surge of supply from the DRC, the world’s largest producer. A critical metal for lithium-ion batteries in electric cars, the dramatic fall in prices for the metal has hurt Glencore which said that its trading arm would ¬suffer a hit to earnings because of a ¬collapse in cobalt prices.
Mutanda Mine is the world’s largest producer of cobalt, which is mined alongside copper, and is one of Glencore’s key assets in the DRC. It produced almost 200 kt (220,000 st) of copper last year and more than 27 kt (29,000 st), or a fifth of global supplies, of cobalt.
The decision to shut the mine comes as Glencore needs to make an expensive shift to mining a different type of mineral deposit on the site, which it has said will be more costly under the DRC’s new mining code. The mine will keep producing until the end of this year, after which it is expected to be placed on “care and maintenance” and could eventually restart production.
Glencore has previously shut production in response to low prices, curtailing its zinc output in 2015 after a fall in prices. Valery Mukasa, the chief of staff of the DRC’s ministry of mines, said it had been informed of the decision and had no further comment.
Photo: Mutanda Mine, courtest of Glencore