China’s CMOC Group Ltd. is under scrutiny by a top US official for allegedly employing “predatory” strategies to depress cobalt prices.
Jose Fernandez, Under Secretary for Economic Growth, Energy, and the Environment, criticized CMOC’s tactics, accusing them of flooding the market with cobalt from mines in the Democratic Republic of Congo.
Fernandez’s remarks were made at a conference in New York organized by the Cobalt Institute industry group.
They reflect growing concerns in the US about China’s dominance in critical metals essential for the energy transition.
Cobalt, a crucial component in lithium-ion batteries, as well as aerospace and defense industries, has seen its price plummet to its lowest level since 2019, posing challenges for Western companies aiming to reduce China’s control over the industry.
“In the case of cobalt, there’s a company called CMOC which is driving this oversupply and that’s keeping prices down,” Fernandez stated in an interview with Bloomberg.
He leads the State Department’s Minerals Security Partnership, which aims to promote responsible critical minerals supply chains globally.
CMOC has declined to respond to Fernandez’s allegations, asserting its commitment to promoting a competitive and sustainable cobalt supply chain.
According to a report by the Cobalt Institute and Benchmark Mineral Intelligence, about 230,000 tons of cobalt were mined worldwide last year, with three-quarters originating from Congo.
Chinese companies processed nearly 80% of the metal, contributing to a global oversupply of around 14,200 tons.
Indonesia, another major producer, has seen an 86% increase in cobalt output, driven by its expansion of nickel mining.
CMOC’s Tenke and Kisanfu projects in Congo are expected to produce more than 60,000 tons of cobalt this year.
However, low cobalt prices have negatively impacted upstream producers and recyclers globally. Jervois Global Ltd., an Australian miner, has cut jobs and shelved projects due to falling prices attributed to Chinese oversupply.
Despite current market conditions, cobalt prices are forecasted to rise in the coming years, driven by the growing demand for electric vehicles. Even Congo is considering implementing export quotas to stabilize prices.
Fernandez emphasized the importance of supporting Western companies in the cobalt market to ensure their sustainability amidst evolving market dynamics.
