Glencore says DRC cobalt stockpile has ‘no impact’

Glencore (LSE: GLEN), the world’s second-largest cobalt producer, says its growing stockpile of unsold cobalt won’t materially affect the company as it contends with export restrictions in the Democratic Republic of Congo (DRC).

The Swiss miner and commodities trader said it is stockpiling all cobalt production from its DRC operations and has declared force majeure on some deliveries this year. While Glencore didn’t disclose the size of its cobalt stockpile, it said any resumed exports would be considered an upside.

“In terms of cobalt, we’ve been quite conservative in what we’ve assumed will get sold this year,” Glencore Chief Financial Officer Steven Kalamin said on an earnings conference all on Wednesday. “Even if we are unable to sell anything this year relative to numbers that we’ve given, it wouldn’t be a material variance.”

The DRC, which supplies the bulk of the world’s cobalt, imposed a four-month export ban in February after prices hit a nine-year low on sluggish demand from the electric vehicle sector. In June, the government extended the ban by another three months, aiming to curb oversupply and buy time to develop a quota system for distributing export rights among mining companies. The price of refined cobalt has climbed 48% this year to $15.88 per lb. on Wednesday. 

Shares in Glencore fell 5.4% on Wednesday in London to close at £2.85 apiece, valuing the company at £34.1 billion (US$45.5 billion). They’ve traded in a 52-week range of £2.05 to £4.96. 

Output rises

Despite the export ban, Glencore’s total cobalt production climbed 19% year over year to 18,900 tonnes. The company raised its 2025 production forecast to between 42,000 and 45,000 tonnes, up from 38,200 tonnes in 2024. In total, Glencore mined 35,100 tonnes of cobalt last year at its Congo sites, where the metal is typically extracted as a byproduct of copper mining.

“The extension of the export ban is expected to significantly tighten cobalt availability and accelerate inventory drawdowns, providing support to prices,” Glencore said in the first-half results.

The company reported first-half earnings before interest, taxes, depreciation and amortization of $5.4 billion, in line with analysts forecast, BMO Capital Markets said in a note.

“Divisionally, copper was a touch light, but offset by a strong half for zinc, with coal in line,” BMO mining analyst Alexander Pearce said. “Expectations of a stronger second half for production should see improved momentum into year-end.”

Cost cutting

Glencore provided more detail around its $1 billion in cost savings targeted by the end of 2026, which includes a new division combining zinc and nickel. The cost cutting, of which more than half is to be done this year, includes headcount, energy, consumables, contractors, maintenance and admin, 76% at the asset level, according to BMO. Divisionally, 37% is to be in zinc and nickel, 26% in coal, and 24% in copper.

Glencore also hinted on Wednesday it may eventually divest its stake in Bunge Global, the newly formed agribusiness giant born from Bunge’s $34-billion merger with Glencore-backed grain trader Viterra.

“The agriculture business is not necessarily consistent with our business model,” Glencore CEO Gary Nagle said in Wednesday’s webcast. “Having a 16.4% shareholding in Bunge is probably not something that would be for Glencore in the long term.”

– With files from The Northern Miner.