Tengyuan Cobalt Industry New Materials, a Chinese manufacturer of electric vehicle battery materials, plans to invest US$134.2 million to construct a new mineral processing plant in the Democratic Republic of the Congo, aiming to strengthen its access to raw materials.

Tengyuan intends to establish a joint venture with a local partner to develop the plant in Lualaba province in southern Congo, the Ganzhou-based company announced.

The collaboration is predicted to help Tengyuan secure high-quality raw material supplies, lower procurement costs, and significantly increase production capacity, it added.

The company completed its first mineral processing plant in the DRC in the first half of last year. The wholly-owned facility has an annual production capacity of 60,000 tons of refined copper and 10,000 tons of cobalt salts.

The new plant is expected to produce 30,000 tons of refined copper and 2,000 tons of cobalt salt products annually. The copper refining facility alone is projected to cost US$100 million.

Construction is anticipated to take 18 months. Once operational, it is expected to take three years to reach full capacity. The post-tax internal rate of return is estimated at 35%.

Tengyuan will hold a 55% stake in the JV. An affiliate of its local partner, SAWA Congo Mining, will own 40%, while the remaining 5% will be held by an employee shareholding platform.

SAWA, a Chinese-owned conglomerate, has over two decades of mining and trading experience in the mineral-rich Central African nation and maintains strong relationships with the local government. It has been supplying raw materials to Tengyuan since October 2021.

Tengyuan reported a challenging Q1, with net profit falling 14% year-on-year to CNY123 million, and revenue down 4% to CNY1.5 billion (US$200 million). The decline was attributed to increased research and development as well as management expenses, along with falling cobalt salt prices, according to the interim report. Despite this, Tengyuan reported an 81% jump in net profit for 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 minerals regulator announced a temporary suspension on cobalt exports, essential for EV battery production, to stem further price declines. The ban does not affect cobalt mining or copper exports, as cobalt and copper are co-mined.

The export ban has helped lift cobalt salt prices, which had slumped to five-year lows due to oversupply. Last week, Cobalt(II) sulfate was priced at around CNY50,000 per ton (US$6,849), nearly 90% above its February low, according to data from Mysteel.

Last year, Tengyuan produced 54,500 tons of refined copper, accounting for nearly 53% of its total output. Cobalt salts contributed about 37% of its annual revenue, with the remainder coming from products such as nickel salts, lithium salts, and ternary lithium battery precursors. The company earned more than half its revenue from overseas markets, according to its annual report.

Despite the new investment plan, Tengyuan’s share price dipped due to weak Q1 earnings.

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