In a surprising turn of events, Chinese mining company CMOC has exceeded expectations by producing 54,024 tonnes of cobalt metal in just six months. This achievement represents 83% of their projected annual output guidance of 60,000-70,000 tonnes for the year. The significant increase in production can be attributed to the expansion of CMOC’s TFM mine and increased outputs at the KFM mines in the Democratic Republic of Congo (DRC).
However, this record-breaking production has led to concerns in the already oversupplied market. Fastmarkets reported that cobalt hydroxide prices have been under consistent downward pressure since the beginning of the year, with a significant drop of 18.8% compared to the same period in 2023. The market is struggling to digest the high volumes of cobalt being produced, with traders expressing worries about the long-term consequences of such large supply on demand.
CMOC has set ambitious production goals for the next five years, aiming to achieve an annual output of between 90,000 and 100,000 tonnes of cobalt metal by 2028. At the current production rates, these targets could potentially be reached this year, further adding to the oversupply issues in the market.
The excess supply has not only impacted cobalt prices but also led to declines in cobalt sulfate and cobalt metal prices. Buyers are seeking lower prices, and the market is facing liquidity challenges as prices hit record lows. With cobalt prices dropping to eight-year lows, market participants are concerned about the sustainability of current production levels and the potential long-term effects on the market.
