The question is, why would you buy a car that can go over 300 miles for a lot of money when you can buy one cheap that has less power, but, is safer and lasts 2-3 times longer? Especially if you drive less t
han 50kms a day. How often do you need to drive 300 miles?
This is relevant to customer preferences. While inner-city drivers may prefer vehicles with less range and power, others will have different preferences. Demand for EVs of all types will continue to grow in future years. Toyota have just worked this out. They have been relentlessly talking down BEVs for a long time now (mainly because they understand that there simply aren't enough battery metals out there to access in the ST). Toyota’s strategy was to ramp up EV production from 2025 onwards (and with a mix of hybrids, BEVs, hydrogen, etc) but they lost sight of the fact that they alone don’t drive customer preferences. Customers decide what they want and EV growth has exploded in Europe and China. Japan has lagged and Toyota has now backflipped and intends to increase its range of EV models in the near-term. Toyoda-san has just stepped down - recognising that it is time for the next generation to drive Toyota’s strategy. Right move IMO - even though I have a lot of respect for Toyoda-san.
Tesla and BYD produced 68% of all LFP batteries last year. I think i came across a bit wrong, i don’t t mean it would be phazed out completely, but LFP is rapidly growing its market share and will be the dominant battery by 2030.
Respectfully, you are moving into straw man territory here, FFNZ. Your original statement was that "cobalt was being phased out", but I am yet to see any evidence to back up your claim. It isn’t a question of which chemistry will have the greatest market share of the battery market in years to come. Thrifting will occur, but cobalt is not being phased out in any way whatsoever at the moment. Quite to the contrary.
As you would know, NCM811 means nickel 80% cobalt 10% manganese 10%. You can’t eliminate cobalt in high nickel chemistry - as nickel is too unstable. Even though there are some chemistries that have dropped cobalt to 5%, they haven’t been commercially scaled as yet. NCM811 is the best battery out there at the moment in terms of both range and energy density (power). Of course, you can eliminate cobalt if you ramp up manganese, but you need cobalt or manganese to stabilise the nickel. And remember (and I have this debate with so many punters), what is technically possible isn’t always easy to commercially scale. Some smart cookie will eventually figure out a way to eliminate cobalt and commercially scale batteries, but I think cobalt is safe for the rest of this decade. And everyone I have spoken with from engineers, industry participants, analysts, large investors/funds, etc agree with this.
And if it was easy to do, it would have been done. So, again - it isn’t a question of which battery chemistry will become the most popular. EV growth is linear - just surpassing 10 million vehicles per year. As these numbers continue to grow, the size of the entire pie grows larger, so even with competing battery chemistries, the total demand for all battery metals will increase. This is why I am invested in CYM. It is my contention that new demand for copper - over and above its existing industrial demand - will drive the copper price into the stratosphere in coming years. This is why I am not being caught up in all this NPV discussion of late. The copper price is going significantly higher in future years, so all the numbers used in feasibility studies will be obsolete.
And mines can’t be brought online tomorrow. They require both time and capital, so I want exposure to copper as the key electrification metal of the future. I am running the same strategy with both cobalt and nickel in my portfolio. Benchmark Intelligence have some excellent forecasts for all the battery metals. If you check their forecasts, you can see that total demand for all battery metals is going to explode by the end of this decade. If Co was being phased out as per your statement, how can you explain their forecasts - especially with industrial demand expected to remain flat?
Coincides with the cobalt price falling 50% in the last year.
Completely false. I now see that you are not truly familiar with the cobalt market. The drop in Co prices last year had nothing to do with EV demand for the metal. The majority of Co demand today comes from industrial customers. For example - customer electronics, aerospace (alloys in jet engines), ceramics, etc. If you look at total demand for cobalt - industrial demand still commands the lion’s share of the market. EV demand is in its absolute infancy. And it is this EV demand that is forecast to grow rapidly in the next 5-10 years and eventually eclipse industrial demand for the metal.
With China’s 2022 lockdowns, consumer demand for electronics was smashed - as noted by Bloomberg the other day. As such, industrial customers in China were holding too much cobalt stock and dumped it on global markets - saturating them. This drove down the price of cobalt. It had nothing to do with EV demand - which is growing. Was almost entirely on the industrial demand side. Now that China has reopened, demand should start picking up again, but there is still a lag as industrial demand in China is still weak post-China’s NY. Consensus forecasts for cobalt for the rest of 2023 are in the $20-$30 l/b range, but with prices languishing at $16 (off from nearly $40 last year), there is some way to go. Nickel prices rocketed in 2022, as demand for nickel sulphate for ternary batteries exploded. These comments aren’t my opinion. I have spoken with multiple people within the industry. I speak regularly with the CEO of a battery metals producer. They just placed some supply into a European gigafactory. And 6 OEMs have been in contact with them about placing large orders from 2024 onwards for both nickel and cobalt. This is in conflict with your statement that cobalt is being phased out. And with all the gigafactories coming online in the near future, the demand for all battery metals is gunna explode. That is why you are seeing GM move into Vale’s battery metals vehicle.
Of course there will be demand for Cobalt and particularly nickel but not as much what was previously thought.
The total number of EVs produced every year is rapidly being scaled up, so this makes zero sense. Even if LFP is the dominant battery chem, the total number of vehicles being produced with ternary lithium batteries will grow - thus increasing demand for nickel, cobalt and manganese.
PieChart, NCM batteries were never cheaper than LFP last year as far as I'm aware? Do you have a reference for this?
PC is correct here. I recall when that happened. There was plenty of commentary out there at the time. I will check my files (unless PC has already sourced something and replied to you).
NCM has its place.
Better and contradicts your original statement that cobalt was being phased out. This is a standard line run by those heavily invested in lithium. I deal with it all the time.
Currently there is an over supply in the cobalt market. Hence the price of cobalt has halved in a year..
As I said, this was due to 1/ sluggish industrial demand outta China - mainly consumer electronics.
2/ Increased supply outta Indonesia in 2022 and also Glencore brought Mutanda back online in the DRC - after mothballing it when prices last fell.
a lot of countries soon will have batteries stamped with where it sourced its raw materials making congo cobalt and Indonesian nickel something that they won't want to be associated with.
The DRC is an abhorrent jurisdiction and it is God’s idea of a sick joke to put 75% of the world’s cobalt in a joint that uses child slave labour and in horrific conditions. But, the phone or laptop you are now using almost certainly contains cobalt from the DRC. Elon talked about eliminating cobalt years ago - while secretly doing deals with Glencore for more cobalt. He doesn’t even try to hide the fact now and is still buying up cobalt. And all those gigafactories are gunna be ravenous for all sorts of battery metals soon. Nice try, Elon.
The USG and Japan have both come out in recent months and talked up large future investments into the DRC. They have finally woken up and realised that China has been in there for the past 20 years dominating the industry. It has left the US exposed in terms of securing critical minerals. Biden and his woke muppet mates have been talking up ESG for some time, but have now seemingly backflipped and want in to the DRC. I am very unhappy about this, but in the end - the reality is that if there is no DRC cobalt - entire industries would collapse. This idea of companies not wanting to be associated with the DRC and Indonesia is fanciful at best. They will just form bodies that claim supply chain tracing from mine to market that don’t involve artisanal supply, but they are basically a joke still and there is no way of knowing how much artisanal supply has been mixed in via Chinese middlemen in the DRC. I am invested in a company offering an alternative non-DRC sourced, China influenced, Co supply.
I'm also invested in Nickel and Nickel sulphate projects. It's always wise to have a diverse portfolio. But I won't be investing in Cobalt.
This makes no sense - invest in nickel, but avoid cobalt. Cobalt stabilises nickel in the cathode. They need each other (again - unless you increase manganese). OEMs are about to ramp up the production of ternary lithium batteries - and this means NCM batteries. Follow the money and deals.
Cobalt is now well below the price used in JRVs 2020 BFS yet EVs are booming. Maybe there's a supply crunch to come but with rapid adoption of LFP I'm not convinced.
Think I will trust those at the coalface and speaking with OEMs on a daily basis than a random internet poster. You do know that JRV picked up a mothballed nickel refinery in Brazil and have now secured the capex to restart it in Q1 2024, yeah? It will be Latin America’s only class 1 electrolytic nickel and cobalt refinery. And they are about to expand (almost double) their cobalt refining capacity at Europe’s preeminent cobalt refinery, Kokkola. Why would they be investing all this money if Co was being “phased out”?
From 2024, JRV will have a seat at the table as OEMs begin negotiations for large orders of battery metals. I have been told those orders will be in the magnitude of 5,000t a pop. There simply aren’t any non-Chinese companies out there who can supply close to that in terms of refined material - let alone multiple orders of that capacity. I would urge you to increase the depth of your research in this space and am happy to provide you with resources (including experts to speak with).
Most Nickel sulphide projects come with high capex, complex underground mining and high processing costs.
Almost all mining projects come with high capex. Mining is capital intensive. Lithium is no exception. Nickel laterites are far more capital intensive than higher grade nickel sulphide projects. That is why the laterites are back in the pecking order. They will eventually see the light of day, but only after the better sulphide projects have been exhausted. Again, I am not going to be drawn into a binary debate over nickel vs lithium. I will leave that for the zealots. My point is that demand for ALL battery metals is going to significantly increase in the coming decade and beyond. This isn’t a binary discussion for me. Copper is an absolute ripper - as demand for traditional uses is already broad, but add in electrification demand and it is a no-brainer to have some copper exposure in one’s portfolio. Same applies to cobalt - regardless of your personal opinion.
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