Chinese cobalt plays go limit up – ASX players to follow?

Huge boost for the ternary battery story today after latest release on NEV policy from China’s MIIT. Local cobalt plays went wild!

China’s largest manufacturer of cobalt products being Zhejiang Huayou Cobalt rose by the maximum 10%, adding nearly US$0.5b of market cap. Ningbo Shanshan, one of the world’s largest cathode producers with capacity of 330mt, was +8% (+US$0.2b of MC). Cobalt recycler and leading cathode precursor provider GEM Co closed +8% (+$0.2b MC). China Moly closed +7% (+US$0.6b MC). In HK trade, China’s leading battery manufacturer BYD finished +6.5%.

Would expect this to take at the most a day or two to filter down to Australia, most likely after a big spike in the cobalt price if we do see follow through to the spot market, which is already tight on supply as we know. If CLQ goes back to a $1, have to assume PGM going to be a lot higher, especially given drill results, PFS and resource upgrade due in the next 6 weeks.

Cobalt angle is a great free option when you consider the value in the scandium and non-core projects.

Bloomberg article below.

“China Tweaks Proposed EV Formula to Reward Longer-Range Models

By Bloomberg News

(Bloomberg) —

China tweaked a proposed formula for calculating credits for electric-car makers to reward models with longer ranges, a move that could benefit companies with more advanced technology.

Under the new proposed formula for calculating credits, electric cars that have a range of 400 kilometers (248 miles) get more points than one with a 350-kilometer range, according to the latest draft of a credit trading system for new-energy vehicles by the Ministry of Industry and Information Technology. The previous proposal published in September made no such distinction, with all vehicles with more than 350 kilometers range earning the same points.

The change, if implemented, will benefit companies with more advanced technology such as BYD Co., China’s biggest electric vehicle manufacturer, according to Tian Yongqiu, a Beijing-based independent auto consultant. The Shenzhen-based company’s e6 battery-electric model has a range of 400 kilometers on a single charge. A BYD spokesman said he couldn’t immediately comment on the proposals.

Shares of BYD climbed as much as 6.8 percent, the most intraday since March 29, 2016. They traded at HK$48.55 as of 2:10 p.m. in Hong Kong, up 6.7 percent, compared with the 0.4 percent gain in the benchmark Hang Seng Index.

The revised proposal comes after initial feedback from carmakers that the targets were overly ambitious. China is proposing to implement a system that would penalize manufacturers for failing to meet fleet emission targets and allow others that exceeded the requirements to sell them, a policy modeled after California’s cap-and-trade framework for the auto industry.

Start Date

The regulators kept the proposed start date of 2018 unchanged, despite the industry minister saying in March that the government was considering delaying the implementation or dialing back some of the measures. Automakers will also be required to obtain a new-energy vehicle credit score of at least 8 percent next year under the new draft, unchanged from the previous version.

The cap-and-trade policy is part of a broader regulatory framework that China is putting in place to guide the development of what it calls energy-saving vehicles, a sector that it identified as a strategic emerging industry. The National Development and Reform Commission this week separately released an industry policy that required makers of conventional fossil-fuel burning vehicles to meet stringent criteria in order to qualify for capacity expansion.


The economic planning agency has also granted 15 permits allowing companies to produce only electric vehicles under a special program. It also allowed foreign automakers to set up a third joint venture if it made electric vehicles. At the same time, the finance ministry phased out consumer and manufacturer subsidies to force weaker players to exit the industry.

The state support helped China surpass the U.S. in 2015 to become the world’s biggest market for new-energy vehicles — comprising electric vehicles, plug-in hybrids and fuel-cell cars. A total of 507,000 such vehicles were sold last year in the country, according to the China Association of Automobile Manufacturers.”