TYongyuan Cobalt Industrial New Materials, a Chinese manufacturer of electric vehicle battery materials, plans to invest US$134.2 million to build a new mineral processing plant in the Democratic Republic of Congo, with the aim of strengthening access to raw materials.
Tengyuan will form a joint venture with a local partner to develop a factory in southern Congo’s Lualaba province, the Ganzhou-based company announced.
It is expected that this partnership will enable Tengyuan to secure high-quality raw material supplies, reduce procurement costs and significantly increase production capacity, it added.
The company completed its first mineral processing plant in the Democratic Republic of the Congo in the first half of last year. The wholly-owned facility has an annual production capacity of 60,000 tonnes of refined copper and 10,000 tonnes of cobalt salt.
hungry for copper
The new plant is expected to produce 30,000 tons of refined copper products and 2,000 tons of cobalt salt products annually. The copper smelting facility alone is expected to cost US$100 million.
Construction is expected to take 18 months. Once operational, it is expected to take three years to reach full capacity. The after-tax internal rate of return is estimated to be 35%.
Tengyuan will hold a 55% stake in the joint venture. An affiliate of local partner SAWA Congo Mining will own 40%, while the remaining 5% will be held by an employee ownership platform.
SAWA, a Chinese-owned conglomerate, has more than 20 years of mining and trading experience in the mineral-rich central African country and maintains strong relationships with local governments. It has been supplying raw materials to Tengyuan since October 2021.
Weak profits in the first quarter
Tengyuan reported a difficult first quarter, with net profit down 14% year-on-year to RMB 123 million and revenue down 4% to RMB 1.5 billion (US$200 million). According to the interim report, this decline was due to a decline in cobalt salt prices, as well as increases in R&D and administrative costs. Nevertheless, Tengyuan reported an 81% increase in net profit in 2024, supported by increased production capacity.
Tengyuan did not comment on the DRC’s recent ban on cobalt salt exports. In February, the country’s mineral regulator announced a temporary suspension of exports of cobalt, which is essential for the production of electric vehicle batteries, in a bid to prevent further price declines. The ban does not affect cobalt mining or copper exports, as cobalt and copper are mined simultaneously.
The export ban helped push up cobalt salt prices, which had fallen to a five-year low due to oversupply. Last week, cobalt(II) sulfate prices were around RMB 50,000 (approximately USD 6,849) per tonne, nearly 90% above February’s lows, according to data from Mysteel.
Tianyuan produced 54,500 tons of refined copper last year, accounting for nearly 53% of total production. Cobalt salts account for approximately 37% of annual revenue, with the remainder coming from products such as nickel salts, lithium salts, and ternary lithium battery precursors. According to its annual report, the company derived more than half of its revenue from overseas markets.
Despite new investment plans, Tengyuan’s stock price fell due to weak first-quarter earnings.
