Kazakh miner ERG will temporarily shut one of its key copper and cobalt mines in the Congo, laying off workers in the latest hit to mining sector in the resource-rich country.
ERG said its Boss Mining asset will be “placed into care and maintenance” from the end of February so it can complete a feasibility study on the construction of two processing facilities.
The shutdown comes as fellow miner Glencore is also expected to cut around 2,000 contractors at its Mutanda copper and cobalt mine in the Democratic Republic of Congo, according to a person familiar with the matter. No full-time DRC employees will be laid off, they said.
The DRC, one of the poorest countries in the world, is the source of over two-thirds of the global supply of cobalt, a metal that is used in electric car batteries.
But miners are grappling with a fall in cobalt prices and the introduction of a new mining code that raises the percentage of royalties they have to pay to the government.
Cobalt prices hit their lowest level in two years this month, due to a surge in supply from the DRC.
Mining is the main economic activity in the south of the DRC, where ERG and Glencore operate mines and processing facilities.
ERG said it is “in discussions with the relevant labour unions and once these are completed we will be writing to employees directly.” A total of 2,800 workers could be let go, according to a person familiar with the matter.
Boss Mining produced over 3,000 tonnes of cobalt last year, according to estimates from Darton Commodities, a Guildford-based cobalt trader.
The company was restructured in December following arbitration brought by Gécamines, Congo’s state-owned mining company.
ERG’s stake was reduced to 51 per cent from 70 per cent, while the share owned by Gecamines rose to 49 per cent. ERG also converted a $1.5bn intracompany loan to Boss Mining into equity.
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