Positive metals markets to drive ERG’s asset development

14th August 2020 By: Mamaili Mamaila - Features Writer and Social Media Specialist

Positive metals markets to drive ERG’s asset development

KEY BATTERY METAL Eurasian Resources Group is poised to be one of the largest cobalt producers in the world at a time when demand for battery metals is expected to rise exponentially

Diversified resources producer Eurasian Resources Group’s (ERG’s) portfolio of copper and cobalt assets in Africa, particularly those in the Democratic Republic of Congo (DRC), are key to its long-term development plans, and the current copper and cobalt market dynamics support its ambitions.

ERG CEO Benedikt Sobotka tells Mining Weekly that the company is “well positioned” to meet the rising demand for strategic metals amid the drive towards net-zero emissions, as well as the ever-increasing importance placed on the digital economy.

Despite the challenges arising from the Covid-19 pandemic, the company has continued to record positive progress at its Metalkol Roan Tailings Reclamation (RTR) operation – a major producer of copper cathode and cobalt in hydroxide. It is located in Lualaba province, about 26 km west of Kolwezi.

At Metalkol RTR – ERG’s flagship metallurgical facility in Kolwezi – the company reprocesses tailings deposited from previous mining operations by other companies spanning back to the 1950s, to the benefit of the surrounding ecosystem in the Musonoi river valley and the local community.

“At full capacity, Metalkol RTR will produce 24 000 t/y of cobalt and supply more than 120 000 t/y of copper cathode, enough to power millions of electric vehicles (EVs) a year.

“We are poised to be one of the largest cobalt producers in the world at a time when demand for battery metals is expected to rise exponentially,” says Sobotka.

He does, however, note that the pandemic has had a sizeable impact on the supply of copper and cobalt globally, with a year-on-year contraction of more than 50% in April shipments of copper scrap, while copper inventories are also visibly down, contracting by 33% year-on-year.

He highlights that copper was trading below $5 000/t in April, and analysts were having to be increasingly bearish, but by the end of June, copper prices were closer to $6 000/t, following six consecutive weeks of increases.

Similarly, the reduced mine supply and disruptions to refinery output of cobalt are expected to result in a 3.3% increase in cobalt prices in 2020, as forecast by market research company S&P Global, Sobotka explains.

As such, a prolonged period of structural undersupply and a tight market can be expected, which will support copper and cobalt prices.

“I would not be surprised if copper prices top $7 000/t at some point in 2021.”

Further, EVs and sustainability have been put firmly at the centre of Europe’s recovery plans, which will inevitably boost demand for battery metals such as copper.

For example, EVs are three to four times more copper-intensive than their combustion-engine equivalents, and new EV production is expected to increase five-fold from 2019 to 2020, exceeding ten-million units during this period, Sobotka underlines.

Despite the very low cost of fossil fuels currently, ERG does not expect countries to delay plans for alternative energy-based solutions.

“Reducing carbon emissions is high on the global agenda, and the pandemic has offered us a unique opportunity to rebuild in new, sustainable ways. The unprecedented EV and renewable-energy initiatives introduced by a multitude of countries are testament to this commitment,” he enthuses.

ERG’s support of the Good Shepherd International Foundation’s (GSIF’s) Bon Pasteur programme in the DRC, and the Children Out of Mining – Northern Kolwezi programme, led by international nongovernmental organisation Pact, forms part of the company’s wider commitment to responsibly produce cobalt.

“As part of our long-standing support of the GSIF’s Bon Pasteur programme in Kolwezi, around 2 000 children were protected yearly from the worst forms of child labour and provided with education between 2017 and 2019,” Sobotka says.

He notes that the programme has recorded significant success in local communities and has been further enhanced with the inauguration of the first Bon Pasteur Child Protection Centre in Kolwezi, also supported by ERG.

The centre aims to create and extend sustainable opportunities for up to 1 000 children to transition out of mining. The centre was opened in 2019 and also provides education, healthcare, nutrition, counselling and human rights training, as well as an opportunity to learn about alternative livelihood opportunities.