Electric cars lift nickel mines as BMW shuns Congo
Nickel mining in Ravensthorpe may restart.
Moves by global carmakers to avoid the Congo as a source of cobalt for electric vehicles could help underpin the revival of Australia’s nickel mines, as First Quantum Minerals mulls the reopening of its Ravensthorpe operations in Western Australia.
Germany’s BMW said on Wednesday it would ensure its suppliers source cobalt, a key commodity in electric batteries, from Australia or Morocco when the company launches its next generation of electric vehicles in 2020 and 2021.
Mines in the Democratic Republic of the Congo dominate the cobalt market, supplying about 120,000 tonnes of the metal in 2016, almost 55 per cent of the total market.
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But its mines, particularly smaller producers owned by local companies or worked by artisanal miners, have long been criticised for dangerous working conditions and use of forced labour and children. BMW procurement boss Andreas Wendt this week said the German carmaker would ensure its supply chain used “responsibly” sourced product.
The company has locked in a supply agreement with Glencore, which shipped 2900 tonnes of cobalt from its Murrin Murrin nickel mine in WA, making it Australia’s biggest producer.
But cobalt is a common by-product from WA’s nickel mines, and the state’s miners shipped 5200 of the battery-making material in 2017-18, according to the WA Department of Mines and Petroleum.
Sales of WA cobalt fetched almost $515 million in the period, as cobalt prices soared to record highs of about $US95,000 a tonne, making it more valuable to the WA economy than coal, salt and mineral sands.
Cobalt briquettes made up only 7 per cent of the total material produced at Murrin Murrin in 2018, but sales of the rare metal are believed to have delivered about a quarter of the mine’s $US748m ($1.1 billion) revenue.
BMW’s announcement comes on top of January reports that a consortium of Japanese major car and battery manufacturers — including Toyota, Honda and Panasonic — were drawing up plans for joint procurement of cobalt, ahead of a likely tightening of the market by 2020.
By then the London Metals Exchange will have finalised its own supply-chain review of product sold on its market, with a view to kicking out suppliers proven to rely on forced or child labour.
While the price of cobalt has fallen substantially since last year’s highs, to hover around $US35,000 a tonne, the prospect of major batterymakers and car manufacturers eschewing DRC product for Australia’s could add weight to plans by WA nickel miners to return their mothballed operations to production.
Many are already targeting their nickel products at the expected electric vehicle boom, which could lift demand for high-quality nickel products and offer a new market outside traditional sales to stainless steel makers.
Strong demand for ethically produced cobalt could provide a boost to their business cases even if, as expected, demand for cobalt is reduced in the next generation of batteries for electric vehicles.
More than 10 per cent of the revenue for First Quantum Minerals’ Ravensthorpe nickel mine came from cobalt in 2017, when the mine was mothballed.
The company confirmed in its annual financial statements last month it was considering reopening the mine this year.
Panoramic Resources is reopening its Savannah nickel mine in the Kimberley that also receives cobalt credits, and Independence Group is investing in new technology to separate nickel and cobalt contained in the concentrate produced at its Nova nickel mine in WA’s south to improve the value of its products to the battery market.
But the key to the sector’s recovery in Australia is still the volatile nickel price, which surged to as high as $US15,750 a tonne in June last year, before sagging to $US10690 by December. It currently sits at $US12,407.
The Australian (26/4/19):
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