China goes all out to secure lithium and cobalt resources
SCMP reported that the emergence of electric vehicles has seen Chinese companies go on a global hunt to secure lithium resources. Now they are rapidly clinching deals to get hold of cobalt whose supply is even more concentrated geographically.
Cobalt, a hard, shiny, greyish metal, a by-product of copper and nickel mining, has seen the biggest price increase among various metals used to make electric vehicle batteries after a demand boom began two years ago, according to Ciaran Roe, global manager of metals pricing at S&P Global Platts.
Mr Roesaid that “Unlike manganese, lithium and nickel, cobalt is limited in supply not just in terms of tonnage but also origin.” Mr Roe added that “I can’t think of another commodity where supply is so reliant on one origin nation than cobalt.”
Almost 60 % of the world’s unrefined cobalt output last year came from the Democratic Republic of Congo in central Africa, whose output was more than 10 times that of the second producer Russia, according to US Geological Survey. Congo also has just over half the world’s reserves of the metal.
Although demand for lithium and cobalt is expected to rise two to three-fold in the eight years to 2025, the sources of new supply of cobalt is far less clear than that of lithium, Roe noted.
While various new mines are in the pipeline in Canada and Finland, it will take time for them to ramp up production, he said.
Even accounting for battery producers’ efforts to reduce reliance on the metal, cobalt demand could rise to almost 300,000 tonnes in 2030, the International Energy Agency – which represents 29 major oil consuming nations – said in a report last week.
The IEA said that “Cobalt prices have nearly tripled in the past two years. This is exacerbated by stockpiling activities at different levels along the supply chain and traders taking speculative positions.”
Last year global refined cobalt production was around 105,000 tonnes, according to Robin Goad, CEO of Canada-based Fortune Minerals which is developing a mine in the nation’s northwest.
Mr Goad said it typically takes a mining project in Canada over a decade to start production after a deposit is first identified.
Its Nico cobalt-gold-bismuth project, which is projected to derive 65 per cent of revenues from cobalt, was discovered in 1996.
With some CAD 125 million (USD 96.5 million) spent on its development so far, if commercialised, Nico’s feasibility studies from 2014 show that it could be one of the world’s cheapest cobalt projects on an operating cost basis, according to Goad.
But because of the estimated high capital investment requirement of CAD 589 million – including a refinery – Fortune is seeking a partner to contribute most of the equity capital to lower the project’s interest expense.
The partner would then receive its pro-rata share of the output and have the right to buy Fortune’s share, at a market-linked price over the life of the mine.
The company has received “expression of interest” from over 25 potential investors – including several in China – which have been given access to the project’s financial data and projections, Goad said.
Source : SCMP