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http://asia.nikkei.com/magazine/201...-and-lithium-are-ones-to-watch-in-2017?page=1
May 25, 2017 10:00 am JST
Cobalt and lithium are ones to watch in 2017
China's appetite for new tech is set to drive demand for key battery ingredients
GEOFF HISCOCK, Contributing writer
Artisanal miners work at the Tilwizembe copper-cobalt mine in the Democratic Republic of Congo.© Reuters
SYDNEY Cobalt may be the most interesting commodity to watch in 2017.
With global carmakers committed to producing more electric vehicles amid changes in battery technologies, Macquarie Research has projected that demand for cobalt-cathode batteries could rise 10% this year. That could give cobalt a significant boost. "Risks remain -- mainly technological ones on the demand side and geopolitical ones on the supply side, but for now the perennial underperformer in metals markets looks well-placed to shine," Macquarie said in a recent report.
The outlook is similarly rosy for lithium, which is also used in device batteries. U.S. chemicals producer Albemarle said in March that it expects demand to grow by 30,000 tons a year, up from an initial forecast of 20,000 tons. The company puts global consumption last year at 190,000 tons.
MARKET MOVER As with most commodities, what happens in China will largely determine which way the markets for technology materials move. China produces, processes, consumes or otherwise controls much of the world's supply and demand for rare-earth metals, lithium, cobalt, manganese and nickel. These materials are in demand for new electronic devices and renewable energy systems, among other emerging applications.
There are exceptions to China's dominance. South Africa is the world's biggest manganese miner, largely from its rich Kalahari Basin. Australia and Chile are the leading producers of lithium, though Chinese companies are angling to secure stakes there. Australia's Lynas is the only significant rare earths producer outside of China, but its key customers are in Japan and China.
Cobalt has an uneasy reputation in the mining industry as a "conflict mineral" in the same vein as diamonds. About 60% of the world's cobalt is mined in the strife-riven Democratic Republic of Congo, where years of civil war, human rights abuses and child labor have left a legacy of suspicion and mistrust. Some mining there is artisanal, or effectively manual, often by very young workers in unsafe conditions.
China buys and processes more than half of the cobalt produced in Congo for its own needs and for shipping elsewhere. Zhejiang Huayou Cobalt is the single biggest buyer of Congolese cobalt. Earlier this year, China Molybdenum bought a 56% stake in the Tenke Fungurume mine, one of Congo's biggest, for $2.65 billion from Freeport-McMoRan of the U.S.
Following a report last year by Amnesty International on cobalt mining conditions in Congo, end users such as Apple,
Samsung SDI and Sony came under pressure to take action.
In March, Apple suspended purchases from Zhejiang Huayou, but it continues to buy cobalt from Chinese rivals Ganzhou Yi Hao Umicore Industries, Lanzhou Jinchuan Advanced Materials Technology and Jiangsu Cobalt Nickel Metal.
Everywhere end users are aiming to iron out potential kinks in their supply chains. Sometimes that can mean getting closer to the source of critical minerals. Officials from
BYD, a Chinese electric vehicle manufacturer that counts Warren Buffett as an investor, disclosed in April that it is in talks with Chilean lithium producers about possible investment.
"We consume 20% of the lithium supply in the world," the Financial Times quoted one executive saying. "That means we have a strong interest to secure a stable supply of lithium."
The brine pools and processing areas of the Soquimich lithium mine in Chile. © Reuters
Chinese metals company Tianqi Lithium last year announced plans to invest in one Chilean producer, and it is working to expand a mine it co-owns with Albemarle in Western Australia. Jiangxi Ganfeng Lithium, another producer, reached a deal in January that will give it a 19.7% stake in a company with lithium projects in Argentina and the U.S. state of Nevada.
In Western Australia, Ganfeng owns 43% of the Mt. Marion lithium mine, which shipped its first concentrate to China in February. Another China-focused company, Australian Securities Exchange-listed Galaxy Resources, resumed concentrate shipments to China from its Mt. Cattlin lithium mine in Western Australia in January.
BYD uses only lithium-iron-phosphate batteries and is the market leader in China for both pure electric vehicles and hybrids. London-based metals consultancy CRU Group, however, says other Chinese electric vehicle makers are moving toward cobalt-based batteries, which are already the battery of choice elsewhere.
CRU predicts that greater interest in nickel-cobalt-aluminum and nickel-manganese-cobalt vehicle batteries from Chinese producers will raise demand for cobalt to more than 8,000 tons by 2021. BAIC Motor's E-series electric vehicle, which uses a nickel-manganese-cobalt battery, was the country's top-selling fully electric vehicle last year.
Short of some dramatic breakthrough in alternative battery technology, demand for lithium, cobalt, graphite and other rare earths looks destined to rise hand in hand with the global growth in electric vehicles, renewable energy and consumer devices.
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