reu-2018-05-24 rising cobalt price
https://www.reuters.com/article/us-metals-cobalt-autos/electric-vehicles-seen-driving-cobalt-crunch-by-mid-2020s-idUSKCN1IP398?il=0
Electric vehicles seen driving cobalt crunch by mid-2020s
Salvador Rodriguez
LAS VEGAS (Reuters) - The increasing popularity of electric vehicles may
create a crunch for supplies of cobalt in the early-to-mid 2020s, miners
and analysts say, adding that small operators trying to start up mines
outside Africa could play a bigger role over time in satisfying demand
for the metal used in rechargeable batteries.
FILE PHOTO: A man prepares to drive a Totem-Mobi electric car-sharing
vehicle parked at a charging station in Marseille, France March 6, 2018.
REUTERS/Jean-Paul Pelissie/File Photo
The Democratic Republic of Congo (DRC) produces nearly two-thirds of the
world's cobalt as a by-product of its copper mines and is taking an
increasingly confrontational stance toward foreign mining companies,
including a new mining code that hikes royalties and taxes.
Human rights groups have said some cobalt from the Central African
country could come from mines using child labor, raising additional
concerns about sourcing within the industry and among buyers of the
metal.
Cobalt is an important ingredient of current batteries and brokerage UBS
described it in a report this week as "the commodity which could stall
the exponential growth in electric vehicles."
While supplies from Congo are expected to remain the most important
factor in global supply for years, exploration and development companies
at the 2018 Cobalt Institute conference in Las Vegas this week said
potential buyers looking to lock in supplies were eager for projects in
other countries.
"There's going to be a big demand from organizations, end users and
battery makers that will want to secure supply that's non-DRC just
because of all of the political risks to that supply," said Brendan Borg,
managing director of Celsius Resources Ltd (CLA.AX), an Australian mining
company that hopes to begin production in Namibia by 2021.
More than 100 companies mining or exploring for cobalt are listed on the
Toronto Stock Exchange and TSX Venture Exchange, up from fewer than 30 in
2015, according to SNL Financial. The exploration companies, known in
Canada as junior miners, are considering locations ranging from Indonesia
to Namibia, Canada, and Idaho and Utah in the United States.
Those explorers will need more funds, though, to bring production on
line.
"The industry needs to see more investments particularly in those
exploration stage projects," Caspar Rawles, an analyst with Benchmark
Mineral Intelligence, said on Wednesday. Benchmark provides research for
mining companies and manufacturers.
Demand for electric vehicles, using cobalt in batteries, could spark a
deficit of cobalt as soon as 2022, he said.
At least 90,000 tonnes of additional cobalt will be needed by 2025 to
meet demand, UBS said in the May note, basing its forecast on
expectations that electric vehicle penetration will grow to 16 percent
globally, up from about 1 percent currently.
Demand and supply were in balance at about 100,000 tonnes in 2017, UBS
said, projecting an oversupply for several years turning to a deficit in
the mid-2020s.
Sean Bromley, director of Pacific Rim Cobalt Corp (BOLT.CD), a Canadian
company that hopes to begin drilling in Indonesia in the next couple of
months, foresees a deficit in supply around 2020 or shortly thereafter.
"We think around 2020 (the EV market) will really begin to take off," he
said on Wednesday. "Seeing some of the battery companies' expansion plans
has reinforced this view, and speaking with commodity trading houses,
they have indicated the same thing."
Growing demand for the mineral has caused a spike in cobalt prices CBD0
on the London Metal Exchange to more than $90,000 a tonne, up from about
$22,000 a tonne in February 2016.
That is driving lots of discussions, said Peter Campbell, vice president
of business development at First Cobalt Corp (FCC.V), which recently
announced the takeover of US Cobalt Inc and its exploration properties in
Idaho and Utah. He said companies looking to secure supplies, in a sign
of their need, were talking to junior miners as much as six years away
from production.
Reporting by Salvador Rodriguez in Las Vegas and Nicole Mordant in Vancouver; Editing by Peter Henderson and Matthew Lewis