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Glencore increased cobalt production by almost a third after restarting output at its Katanga unit in the Democratic Republic of Congo.
The Swiss commodity giant is seeking to double its production of cobalt in the next two years, tightening its grip on the market for the key battery material in electric vehicles. First-half cobalt output jumped 31% to 16 700 tons, the company said in a statement on Tuesday.
While Glencore [JSE:GLN] is cashing in on higher cobalt and copper demand, it also must confront serious challenges this year. The US Department of Justice has launched a corruption probe into operations in Congo, Nigeria and Venezuela, and it’s facing higher taxes and tougher regulation in Congo.
In its production report today, Glencore maintained most of its full-year targets, with slight reductions to its coal and lead estimates. Copper output rose 8% during the first half and nickel production increased 21%.
“African copper saw a faster ramp up at Katanga than we had modeled and stronger performance at both Mutanda and Mopani, also translating into the higher cobalt production,” RBC Capital Markets analyst Tyler Broda said in a note.
Katanga boasts one of Congo’s biggest reserves of copper and cobalt but it has underperformed for decades. In 2015, Glencore suspended operations to address the problems and upgrade the facilities. Production restarted in December and the mine is scheduled to hit 300 000 tons of copper next year, when it will account for about a fifth of Glencore’s global production.
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