JPM-Glencore PLC Resumption of Cobalt export sales is apositive kicker for Copper EBITDAand cash flow-20250922

Our Take – resumption of cobalt sales is +ve: Democratic Republic of Congo,the world’s largest producer of cobalt, is to allow exports to resume in Oct’25following an eight-month export ban. In our coverage, this has most directrelevance for Glencore (OW), which mines cobalt in DRC as a by-product ofcopper production. Given this relationship, cobalt sales are a major kicker forcopper division revenue and EBITDA and the export ban since Feb’25 has been asignificant financial drag on Glencore’s revenue, EBITDA and net debt. JPM basecase estimates assume zero cobalt sales in Q4, so any sales would imply upgrades.We forecast 28kt sales in 2026 (vs ~34kt in 2024) for $735m of revenue, equivalentto ~20% of Copper EBITDA, ~8% of GLEN Industrial EBITDA. GLEN is tradingat mark-to-market 2025E/26E EV/EBITDA of 6.5x/5.2x, 4%/5% FCF yield.

•Noteworthy Areas: DRC (75% of global cobalt output) is to allow someexports to resume from 15 Oct. Miners will be allowed to ship just 18kt in totalfor remainder of this year, and a maximum of 96.6kt in 2026 and 2027, 60%below 2024 levels. The fear of exports resuming, cratering prices, is likelybehind us; given the reduced volumes and the im of the policy is to rebalancecobalt s/d markets and get inventories to one month of demand. RegulatorARECOM is to “make final adjustments to rebalance cobalt markets for yearsto come” and hold 10% of the quota for strategic reserves. Quotas are to beprorated for each miner based on historical production. DRC produced ~220ktof cobalt in 2024.

•Outlook & Guidance: GLEN has not provided specific guidance on theexpected duration of the cobalt export ban.

•Likely changes to consensus: JPM GLEN estimates assume that the exportban continues in Q4 and expires in Q1’26. We assume zero cobalt sales inH2’25. Therefore, the resumption of exports in Oct’25 can introduce minorupgrades to our Copper revenue and EBITDA forecasts in Q4’25 and ourconservative forecasts for 2026 could carry minor upside risk (we assumeGLEN sells 28kt in 2026).

•Peer read across: Chinese miner CMOC (covered by Avery Chan, OW) is thelargest miner of cobalt in DRC; its shares closed +2% in HK today.

•Valuation: We calculate GLEN is trading on mark-to-market 2025E/26E EV/EBITDA of 6.5x/5.2x, 4%/5% FCF yield.

•Conference Call Details: none