Scramble for battery materials accelerating

Glencore did a deal with Shenzhen-listed GEM this week to sell it cobalt over the next three years.
In a translated statement, GEM said cobalt resources were “globally scarce”.
“In the industry, the company’s demand for cobalt resources is increasing, and the company’s cobalt resource recovery system cannot meet its strategic needs,” it said.
“The [Glencore agreement] will effectively protect the strategic needs of the company’s cobalt resources and help to further enhance the company’s global presence in the country.”
According to Bloomberg, Volkswagen this week secured €20 billion in battery supplies to support an aggressive push into electric vehicles, while Samsung C&T has reportedly joined Apple in seeking to secure cobalt directly from miners.
In lithium, Korea’s POSCO recently joined China’s Ganfeng Lithium and Great Wall Motor Company as partners at Pilbara Minerals’ Pilgangoora project, and neighbour Altura Mining reported yesterday that it was in talks with major shareholder Shaanxi J&R Optimum Energy Co.
According to the Financial Times, China’s CATL this week acquired a controlling stake in unlisted Quebec-based developer North American Lithium ahead of the battery major’s planned US$2 billion listing in Shenzhen.
Canada’s Lithium X Energy Corp also confirmed that China’s NextView Capital had completed the C$265 million takeover of it.
“As far as we can see, it tells us once again that it is China, rather than the Western world, who properly understands the raw material requirements and value of global vehicle electrification,” UK firm Bernstein said yesterday.
Bernstein noted the Chinese were well ahead of the curve when it acquired the Tenke Fungurume copper-cobalt mine in the DRC in 2016 for $2.65 billion.
“They clearly get it; the West doesn’t seem to at the moment,” analyst Paul Gait said.
The first report this week from Wood Mackenzie’s Battery Raw Materials Service said panic around the security of raw material supply continued to build.
“Some such as Toyota and others have gone ‘upstream’ and bought equity in lithium mines. While sightings of Elon Musk in Chile started rumours that the poster child of EVs may be about to do the same,” Wood Mac said.
“Perhaps BMW may have pulled off the biggest coup so far if reports that they have signed a 10-year deal for lithium and cobalt turn out to be true.”
Wood Mac expects lithium carbonate demand to grow from 233,000 tonnes last year to 330,000t in 2020 and 405,000t in 2022, and prices to peak this year.
Meanwhile, it said cobalt demand totalled 104,000t last year (49% of which was from the battery sector) and was set to grow by an additional 9% this year to reach 113,000t.
“By 2022, we forecast cobalt demand from batteries alone to reach 98,000t – or 61% of the cobalt market,” Wood Mac said.
“While such a figure would have seemed unrealistic a few months ago, the incremental supply from Glencore, ERG and others now means that we expect significant surpluses in the years 2019 to 2022.
“Following an average of US$70,548/t this year, we expect prices to ease back to $55,116/t in 2019, before falling further to a low of $33,069/t in 2020 and 2021.”
LME cobalt hit a new high of $87,125/t overnight.