Katanga Mining, a unit of diversified major Glencore, on Tuesday announced a temporary suspension in cobalt exports and sales from its Kamoto mine, in the Democratic Republic of Congo (DRC), after detecting low levels of radioactivity in its product.
A total of 1 472 t of finished product is impacted by the sales suspension, Katanga said, sending its TSX stock falling by as much as 33% to its lowest level in more than a year.
The levels of uranium detected in the cobalt hydroxide exceeded the acceptable levels allowed for export through main African ports.
Katanga announced that it would build a $25-million ion exchange system to remove uranium from the cobalt produced. The ion exchange system would be commissioned by the end of the second quarter of next year.
In the meantime, production at Kamoto would continue and would be stored to be processed through the ion exchange system in the third and fourth quarters of next year.
Katanga is also conducting additional surveys to identify the source of the uranium and is exploring options to mitigate the impact of the sales suspension.
Its revenue in the fourth quarter of 2018, and the first two quarters of next year will be affected by the sales suspension.
The Katanga export ban comes at a time when commentators say that an oversupply of the metal is likely to keep market conditions subdued through the end of 2018.
The Glencore unit’s shares fell to a 52-week low of C$0.44 a share after the news broke, but traded at about C$0.50 a share by midday in Toronto.