Yesterday (7th October) Glencore announced it had agreed a deal to supply cobalt to Shenzen-listed Gem Co, a producer of battery metals. The deal, scheduled to run from 2020 to 2024 is for Glencore to supply 61,200 tonnes of cobalt. At time when many countries, and indeed companies, are starting to cast around to secure their supplies of battery metals for the anticipated rising demand for electric cars, it looks like once again China has got in there first.
Benchmark Mineral Intelligence have written a blog in which they think this move could cause widespread shortages. BMI believe this deal ties up 25% of Glencore’s ‘sustainable’ forecasted cobalt hydroxide production for the contract period and follows on Glencore closing one of its cobalt mines in the DRC following lowered cobalt prices.
Benchmark point out that as the world’s largest producer of cobalt, estimated to account for 31% of global supply in 2019, cobalt is in a critical position, as a lot of the other cobalt derived from the DRC is not traceable, and is possibly associated with illegal or artisanal mining. Traceability of cobalt is of critical importance if you’re manufacturing electric vehicles and need to consider how your brand is perceived.
On top of this deal with Gem, Benchmark estimates that an additional 12,000 tonnes of cobalt hydroxide from Glencore is due to be supplied to Umicore, set to be the new owner of the Kokkola cobalt refinery in Finland, tying up 50% of Glencore’s cobalt production.
Benchmark Minerals forecasts cobalt demand in lithium ion batteries to increase from 75,000 tonnes in 2019 to 152,000 tonnes in 2024, with a total market size of 213,000 tonnes. If you want to stay on top of where the cobalt price is going consider a trial or subscription to Benchmark’s price forecasts, updated quarterly.
For more of Benchmark’s cobalt analysis continue reading…