ERG declares force majeure on cobalt deliveries from DRC, sources say

Eurasian Resources Group (ERG) has declared force majeure on deliveries of battery material cobalt from its Metalkol operation due to the Democratic Republic of Congo's (DRC) temporary export ban, two sources familiar with the matter said.

ERG is the third largest cobalt producing company in the DRC, which is the world's top producer of the mineral used to make the lithium-ion batteries that power electric vehicles.

The Luxembourg-based company has had to declare force majeure — a status that shows unexpected circumstances prevents them from meeting contract obligations — because it has no cobalt stocks outside DRC, unlike other producers, one of the sources said.

ERG did not immediately respond to requests for comment.

Last month DRC's government suspended cobalt exports for four months to rein in oversupply and large surpluses, which had seen prices crash to nine-year lows around $22 (R401.45) per kilogram or $22,000 (R401,450) a metric ton. The central African country, the world's largest cobalt producer is also considering introducing cobalt export quotas.

ERG's Metalkol operation which processes tailings is estimated by Darton Commodities to have produced around 19,200 metric tons of cobalt in hydroxide or around 9% of total production in DRC last year.

Metalkol's cobalt production amounts to 7% of the global total at more than 280,000 last year, according to Darton, a specialist supplier of cobalt metal products.

It was not known when exactly the force majeure was invoked, but cobalt prices in China, the world's top cobalt consumer, have jumped as buyers have become increasingly worried about supplies, cobalt industry sources said.

Prices of cobalt, used to make electric vehicle batteries, as assessed by Shanghai Metals Markets (SMM) have jumped to 200,000 yuan (R498,000), up more than 20% since before DRC imposed an export ban.

The ban, announced by DRC's Authority for the Regulation and Control of Strategic Mineral Substances' Markets (ARECOMS) will be reviewed in three months and could either be modified or terminated, depending on its results.

DRC's government eventually plans to introduce quotas on exports of the metal, which are going to be negotiated during the export suspension period, according to sources. China's CMOC Group is the largest cobalt producing company in the DRC, accounting for 114,165 tons last year, more than double the amount it produced in 2023.

Miner and commodity trader Glencore is the second-largest producer in the DRC with 38,200 tons in 2024 down 8% from the previous year.

CMOC, Glencore and ERG are also the world's top three cobalt producers

Reuters