Saturday 10 June 2017

Race to supply more cobalt is on as demand for electric cars increases

Race to supply more cobalt is on as demand for electric cars increases

10/06/2017

Excavators and drillers at work in an open pit copper and
 cobalt mine in the DRC.

The race is on to supply more of the cobalt needed for batteries in the fast-growing market for electric vehicles — and that means fresh competition for the big players Glencore and the Democratic Republic of Congo.
A pipeline of projects is looming in places including Australia, the US and Canada after cobalt prices more than doubled in the past year. Glencore produces almost a third of the world’s supply, mainly from the Congo, which is by far the biggest source, accounting for as much as 65%.
Among those backing new global developments are billionaire Anil Agarwal and mining tycoon Robert Friedland. They were aiming to capitalise as a battery boom sent demand for cobalt soaring more than 30-fold by 2030, said Bloomberg New Energy Finance.
"There’s going to have to be a response that goes beyond Congo," said Sam Riggall, CEO of Friedland-backed Clean TeQ Holdings, which is developing a $680m cobalt, nickel and scandium project about 350km west of Sydney. Congo’s tight grip on the market is a concern for battery producers to [car] makers, he said. "They are desperately looking for sources of supply outside of Africa."
The arrival of an era of battery-powered vehicles had already kick-started a period of unprecedented growth for the metal, Franck Schulders, Glencore’s head of cobalt marketing, said in an interview. Volkswagen and Ford were among car makers investing in electric vehicles and the whole market could be worth $244bn by 2025, Goldman Sachs said in a late 2015 report.
Rising cobalt demand and flat supply in the 100,000 tonnes-a-year market opened a 1,500 tonne deficit in 2016 that could triple this year, said CRU Group. There were more than 370 undeveloped discoveries and at least a dozen viable projects outside Congo that could come online by 2023, CRU senior consultant Edward Spencer said in an e-mail.
"There’s no way that current supply is going to keep up," said Matthew Painter, MD of Ardea Resources, which is aiming to develop a former Vale deposit in Western Australia that the company estimates holds the developed world’s largest cobalt resource.
"Some of the forecasts for cobalt supply are pretty dire."
Cobalt on the London Metal Exchange traded at about $32,000 a tonne at the end of 2016, up 36% from the previous year, and has rallied about 65% to more than $56,000 a tonne in 2017. That is equivalent to more than $25.40 a pound. They were likely to double in 2017 and could remain above $20 a pound until the end of the decade, CRU’s Spencer said.
A typical electric car battery contains 15kg of cobalt, while a laptop needs about 33g and a smartphone requires 6g, according to Sydney-based project developer Cobalt Blue Holdings.
Glencore’s Hong Kong-traded shares declined 0.2% to HK$28.55 at 9:56am local time on Friday.
Almost all cobalt was produced as a by-product at nickel and copper mines and "in terms of new projects, a higher cobalt price certainly makes some" planned multi-metal developments more viable, said Macquarie Group’s head of commodities research, Colin Hamilton.
While Congo would remain the dominant supplier of the metal, the nation’s market share would fall as a result of developments elsewhere, he said.
Australia, which holds about 14% of the world’s known reserves, is poised for the largest growth in production in the six years until the end of 2021, with output forecast to rise 31%, according to Business Monitor International. Congo will add 24% over the same period, as output in China rises 10%, the data show.
"There’s a few new ideas, new mines and junior mining companies. They are all years away from production and they tend to be very small, like fantasies," said Benedikt Sobotka, CEO of Eurasian Resources Group, which produces copper and cobalt in Congo. "They are not going to make a big difference for our industry."
Projects in Congo from Glencore and Eurasian Resources could potentially add 40,000 tonnes of mined supply by 2022, according to CRU’s Spencer.
Congo is under pressure to restrict artisanal mining, including in the cobalt sector, which a 2016 Amnesty International report said had a prevalent use of child labour.
Tesla Motors, among the largest consumers, undertook in 2014 to source the metal only from North American miners because of supply-chain concerns. Apple said in March it had expanded responsible sourcing efforts beyond conflict minerals to include cobalt.
There was work across the cobalt supply chain "to look at provenance, verification and that sort of due diligence", Glencore’s head of sustainable development, Anna Krutikov, said in an interview.
Glencore supported co-operatives in Congo with more than 3,000 members offering people alternative livelihoods to artisanal mining, including in agriculture, she said.
Bloomberg

No comments:

Post a Comment