Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

CORRECTED-Battery makers descend on Australia, Canada cobalt developers

CommoditiesMar 19, 2018 20:17
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
CORRECTED-Battery makers descend on Australia, Canada cobalt developers

(Corrects location of ERG to Luxembourg, not Russia, in paragraph 14)

By Melanie Burton and Nicole Mordant

MELBOURNE/VANCOUVER March 19 (Reuters) - Nervous Asian battery makers are turning to early-stage cobalt projects in Australia and Canada to lock in supplies of the critical battery ingredient ahead of expected shortages as demand for electric vehicles revs up.

Mine developers say interest from Japanese and Korean firms is particularly strong as they compete with rivals from China, which has built deep supply chain ties with the Democratic Republic of Congo, the world's top producer.

The central African country accounts for nearly two-thirds of global cobalt output and production is set to rise despite concerns over the use of child miners and rising royalties. are starting to see the first signs of an arms race to secure long term cobalt supplies," said Joe Kaderavek, chief executive of Australia's Cobalt Blue COB.AX .

"With over 85 percent of new global cobalt supply over the next decade coming from Africa, in a region where the Chinese have entrenched relationships, the Korean and Japanese cobalt processing industries are very focussed upon Australian and Canadian projects."

South Korean battery maker SK Innovation Co Ltd 096770.KS locked in a seven-year supply deal with Australian Mines AUZ.AX last month, helping to win funding for a project that has yet to make a final investment decision and does not expect to produce any cobalt until at least 2020.

At least half a dozen Australian and Canadian mine developers are currently in talks on potential supply deals with battery and automakers for production at some point beyond late 2019-2021, company executives told Reuters.

These include Australia's Aeon Metals AML.AX , Northern Cobalt N27.AX and Cobalt Blue, and Canada's Ecobalt ECS.TO and Fortune Minerals FT.TO .

China's Beijing Easpring Material Technology Co 300073.SZ , which makes products for battery makers, has also signed a binding five-year deal with Australian mine developer Clean Teq CLQ.AX .

"We are speaking to a number of parties about the balance of the offtake - that includes not just Chinese potential customers but also customers from other parts of the world," Clean Teq's CEO Sam Riggall told Reuters.

In an indication of heightened demand, Riggall said automotive companies were also showing interest, along with cathode manufacturers, the direct users of cobalt, a key material in lithium-ion batteries.

DRC GROWTH

In the DRC, production is set to rise sharply, driven by commodity giant Glencore Plc GLEN.L , the world's biggest producer, and Luxembourg's ERG taking DRC's share of global output to over 75 percent by 2023, according to UK-based Darton Commodities.

Glencore last week agreed to sell around a third of its cobalt production over the next three years to Chinese battery recycler GEM Co Ltd 002340.SZ . in Australia and Canada will be small to mid-size, producing around 1,000 to 5,000 tonnes each, in a global market expected to swell to some 157,000 tonnes by 2023.

Fortune Minerals said it has signed 25 confidentiality agreements, while Australia's Ardea Resources ARL.AX said it has seen significant interest.

"Certainly some of the groups that we have spoken to have said that they won't look at DRC sources, they want clean ethical sources of cobalt," said Ardea Managing Director Matthew Painter.

Japan's Panasonic 6752.T , the main battery supplier to Tesla Inc TSLA.O , said it was aware of issues in the DRC and was looking to source some material elsewhere, and it was also looking at lowering its dependency on cobalt.

"Regarding concerns about procuring cobalt and other raw materials, we are addressing this by establishing advance procurement contracts and developing new procurement routes," the company said in emailed comments.

South Korea's Samsung (KS:005930) SDI 006400.KS and LG Chem 051910.KS declined to comment specifically on procurement but also said they were looking at other methods to source cobalt and to reduce usage. REMAIN

Despite surging share prices for some cobalt developers, analysts warn the projects are not without risk, given fickle technology and the high cost of processing out contaminants like arsenic, found in some North American operations.

Clean Teq shares more than doubled in the second half last year, but have since slipped 20 percent, partly because it has twice delayed the date of its definitive feasibility study, said Larry Hill, an analyst with Canaccord Genuity in Australia.

Still, the company easily raised A$150 million ($117 million) this month, and pulled forward its production timeline by a year.

"There's still a lot of upside in any cobalt supply that is ex-DRC," said James Eginton, an investment analyst with Sydney's Tribeca Global Natural Resources Fund, which took part in the raising.

"The challenges of the DRC make anything that comes out of anywhere else a lot more attractive."

($1 = 1.2817 Australian dollars)

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Australian cobalt valuations seen rising as they look to lock in supply deals

http://reut.rs/2GltqDB Cobalt mining and reserves statistics

http://reut.rs/2Fn0uhb

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

CORRECTED-Battery makers descend on Australia, Canada cobalt developers
 

Related Articles

Oil dips as U.S. storm-hit supply makes slow return
Oil dips as U.S. storm-hit supply makes slow return By Reuters - Sep 17, 2021

By Roslan Khasawneh SINGAPORE (Reuters) -Oil prices fell on Friday as more supply came back online in the U.S. Gulf of Mexico following two hurricanes, but both benchmark...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email