Trafigura Group has been forced to seek new funding for one of its flagship investments — a $600-million copper-cobalt project in the Democratic Republic of Congo — in the latest headache for the trading house’s embattled metals business.

The project being developed by Chemaf, a longtime partner of Trafigura, has run into difficulties amid cost overruns and weak cobalt prices according to people familiar with the matter, who asked not to be identified discussing private information.

Trafigura’s metals unit is already under fire after announcing in February it was the victim of a massive alleged nickel fraud. Trafigura vies with rival Glencore for the status of the world’s largest metals trader, but the business has been overshadowed in recent years by the eyewatering profits earned by its energy traders — even before the nickel scandal became public.

Trafigura last year announced a $600-million loan for Chemaf for the construction of what it said would be one of the largest copper and cobalt mines in Congo at Mutoshi, as well as a processing plant there and another at its Etoile operation in Lubumbashi.

However, the project has overshot its budget and can’t be completed with the current loan facility, the people said. As a result, Trafigura has been sounding out investors who could provide additional money to help complete the project. The trading house is seeking additional funding of about $200-million to $300-million, according to one of the people.

It’s not clear how much of the $600-million loan has been drawn down. The loan is secured against Chemaf’s assets, according to one of the people.

“Trafigura has been working with Chemaf to review options for the Mutoshi and Etoile development projects in light of challenging market conditions, which include persistently low cobalt prices and inflationary pressures facing the mining industry,” the company said in a statement. “Trafigura remains committed to the Democratic Republic of Congo and building its presence in fast-growing battery metals markets.”

A Chemaf spokesperson said that the company had completed over 70% of the construction of the new Mutoshi operation, and that it and Trafigura were “working collaboratively to review the most optimal pathways to first production.”

The project has become less attractive after a slump in cobalt prices, which in May fell to the lowest in nearly four years. The market for cobalt hydroxide, the intermediate form produced by Chemaf and other Congolese miners, has been particularly hard hit amid booming supply and a slowdown in Chinese demand.

It’s not clear how much Trafigura stands to lose if the project falls flat. The loan was syndicated last year to banks led by the Eastern and Southern African Trade and Development Bank, known as TDB, although Trafigura still retains a significant exposure, according to several of the people. TDB did not respond to emailed requests for comment.

Chemaf has a longstanding relationship with Trafigura dating back more than 15 years. Shiraz Virji, the company’s founder and chairman, started selling pharmaceuticals from India to Congo in the 1980s when it was still called Zaire. He acquired his first mining concessions in Congo in 2001, according to Chemaf’s website, in a wave of privatizations after former President Joseph Kabila came to power.

The $600-million deal to build a “fully mechanized” mine is focused on a site which for years has been dug by hand in what’s known as artisanal mining. Trafigura and Chemaf started a pilot project in 2018 to improve safety conditions for artisanal miners working at Mutoshi, but abandoned it in 2020 when the Congolese government created a state-controlled monopoly on the sale of hand-dug cobalt.

The timeline for the project had already begun to slip last year. When Trafigura first announced the $600-million loan last January, it said the Mutoshi mine would start producing by the third quarter of 2023. By November, when the syndication of the loan was announced, the anticipated start of production had been pushed back until the fourth quarter of 2023. Now it is not expected to be completed this year, one of the people said.