CLA - Cobalt related news, page-7

January 17, 2018 1:15 pm JST
Japanese cobalt traders find there is none left to buy

Output struggles to keep up with demand for key electric car component
SHUHEI OCHIAI, Nikkei staff writer

A worker at a cobalt mine in the Democratic Republic of Congo's Katanga Province. Harsh working conditions in the mines have drawn criticism from international human rights groups. © Reuters
TOKYO -- Prices of cobalt roughly doubled in 2017 as automakers scrambled to secure the silvery element, which is used in batteries that power emission-free vehicles. The global shortage is hitting Japanese traders of the metal.


One Tokyo trading company is feeling the heat. When it sought to purchase cobalt on short-term contracts in early December, the response from suppliers in China and Western countries was the same: Their stock for 2017 had already run out.
"I've never heard them say they can't give us anything [before]," said the company's purchasing manager.
The supply squeeze has become so severe that it could slow the spread of electric cars.
Problems in producing countries, including methods of production that have drawn international criticism, are causing bottlenecks in output. The Democratic Republic of Congo, which accounts for more than half of global supply, is considering raising royalties on cobalt by more than 100%, according to recent reports.
"A car maker will be looking to secure maybe 7 years worth of raw materials to continue support and launch EVs," Tony Southgate of Eurasian Resources Group told the Financial Times Commodities Tokyo Summit in December.
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Automakers are taking matters into their own hands. Germany's Volkswagen reportedly tendered bids for long-term supply contracts with mining companies.
Cobalt usually comes as a byproduct of copper and nickel mining, which makes it difficult to raise output quickly in response to growing demand, according to George Heppel of CRU, a London consultancy. When output of these metals falls in response to weaker prices, cobalt output drops in tandem. Heppel predicts supplies may again tighten further, starting around 2022 to 2023.

Prices for cobalt have doubled in the past year as automakers scramble to secure the essential component for electric vehicles.
Cobalt is used in the cathodes of lithium-ion batteries found in electric vehicles. According to the U.S. Geological Survey, global cobalt ore output totaled 123,000 tons in 2016, an increase of 80% from 10 years earlier. However, production has been flat during the past few years.
Benchmark spot prices on the London market have risen above $35 per pound, more than three times the level of two years ago. With cobalt accounting for 10-20% of the cost of li-ion batteries according to some estimates, soaring prices could well dent global production of electric cars.