COMMODITY FOCUS: COBALT
The price per tonne of cobalt – essential to EV battery production – rose to $82,000 on the London Metal Exchange in mid-February. This represents a tripling of value since the start of 2016, and a 147 per cent jump since January 2017.
BURGEONING EV demand is already proving a disruptive force for both the mining industry and end users of metals such as lithium and cobalt.
In order to meet this increasing demand for EV batteries, cobalt supply will need to reach 180,000 tonnes (t) by 2026 – up from 48,000t in 2016, according to Benchmark Mineral Intelligence.
Platts expected a tripling in demand to more than 300,000tpa by 2030.
This surge in demand for battery metals could effectively slow the EV boom – with tightening cobalt supply the most likely offender, wrote Diana Kinch, editor at S&P Global Platts SBB Steel Markets Daily.
“Bottlenecks are already emerging in the EV supply chain,” she said.
“Tesla motors fell behind in its production targets last October.
“The lag is persisting partly because Panasonic has been unable to supply batteries quickly enough, due to insufficient metals supply available at the right price, according to metals consultancy Roskill.
“Likewise, Volkswagen has reportedly been unsuccessful in striking a deal with any mining company after issuing a tender in September for a minimum of 5 years supply of cobalt for batteries at a fixed price.”
Now, Apple is looking at buying cobalt in bulk direct from miners for at least the next five years, and BMW is close to signing a 10 year supply contract for both lithium and cobalt.
In response to demand, mining giant Glencore is set to increase its cobalt output in the Democratic Republic of Congo (DRC) at its Katanga mine, which will add 11,600 tonnes of cobalt to Glencore’s total production in 2018.
But supply side issues are still exacerbated by the geopolitical risks and human right abuses associated with the industry in the DRC, which is currently responsible for two-thirds of global supply.
The DRC parliament has also proposed a hike in cobalt royalties from 2 per cent to 10 per cent to boost revenues as part of a long planned mining code revamp, which may deter further foreign investment.
This makes more production outside the politically-charged DRC essential to minimise the impacts of an impending cobalt supply deficit.
Australian Projects
Australia, home to the world’s second-biggest cobalt reserves, is seeing a rush of interest in advanced local projects and cobalt-focused explorers.
In February, shares in of battery and technology metals developer Australian Mines surged after the company signed an off-take agreement with South Korean battery maker SK Innovation for nickel and cobalt from its flagship Sconi project in QLD.
The agreement is contingent on Australian Mines securing project financing by the end of 2018 and for mining to start before the end of 2020.
Clean TeQ is aiming to start production from it’s Sunrise project, one of the largest cobalt deposits outside Africa, in 2021.
In February, the NSW Department of Planning and Environment formally issued the mining leases (MLs) over the project area.
The company is currently preparing a mine operation plan (MOP) for approval, which will enable the commencement of site works and construction later in 2018.
Game Changers
But these project are years away from production and will not fill the supply gap in the short to medium term.
This has seen companies look for innovative alternatives.
A Samsung subsidiary plans to buy stakes in recycling tech companies to ensure long-term cobalt supply, Bloomberg reported earlier this year.
One of these recycling companies is Belgian-based Umicore, which had about 10,000 employees and a turnover of €11.1 billion in 2016.
Umicore chief executive Marc Grynberg told the Financial Times that recycling cobalt from used smartphones was an untapped market.
“We have billions of dismissed end-of-life smartphones … that could be utilised to power millions of electric vehicles. Millions,” Mr Grynberg said.
“If there is one thing that needs to be done … starting now is to make sure there are mechanisms in place to motivate people to return their disused smartphones.”
But recycling will not be enough on its own – projected annual cobalt production from old batteries is a drop in the ocean next to the increase in projected yearly demand.
Companies and researchers are also investigating alternatives; like minimising the amount of cobalt in EV batteries, or replacing it entirely.
Most recently, researchers at Northwestern University in Illinois have created a highly efficient, inexpensive lithium-iron-oxide battery that replaces cobalt with iron.
Professor Christopher Wolverton and his team of researchers, in collaboration with a team of researchers from Argonne National Laboratory, developed a rechargeable lithium-iron-oxide battery that can cycle more lithium ions than its common lithium-cobaltoxide counterpart.
Professor Wolverton’s team has improved upon the common lithium-cobalt-oxide battery by leveraging two strategies: replacing cobalt with iron, and forcing oxygen to participate in the reaction process.
“Four lithium ions for each metal — that would change everything,” he said.
“That means that your phone could last eight times longer or your car could drive eight times farther.
“If battery-powered cars can compete with or exceed gasoline-powered cars in terms of range and cost – that will change the world.”