The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
While Glencore stockpiles, China may not be so benevolent Critical Minerals Alliances 2023 - September 12, 2023
Battery-grade cobalt sulfate is a high-purity pinkish-red crystalline material with very low levels of impurities. It is suitable as a raw material for precursor cathode active materials used in the manufacture of lithium-ion batteries.
Electra will supply LG Energy Solution with 3,000 metric tons of cobalt contained in a cobalt sulfate product in 2025 and an additional 4,000 metric tons in each of the following years through 2029 for a total of 19,000 metric tons.
Electra Battery Materials is based in the growing Battery Belt in Canada. This map shows its location in relation to resources that will support battery manufacturing.
Still overshadowed by lithium but no less significant, cobalt falls within a unique category as a critical mineral not only for its properties but also for its controversial supply.
As a fundamental component necessary for nickel-cobalt-manganese (NMC) lithium-ion batteries, cobalt warranted its place as a critical mineral vital to the zero-carbon transition due to the necessity of those batteries to power a clean, emission-free future.
Its critical uses, however, go far beyond EV batteries. For example, cobalt is also used in airbags; catalysts for the petroleum and chemical industries; cemented carbides (also called hard metals) and diamond tools; corrosion- and wear-resistant alloys; drying agents for paints, varnishes, and inks; dyes and pigments; ground coats for porcelain enamels; high-speed steels; magnetic recording media; magnets; and steel-belted radial tires, to name a few.
Much like other widely used minerals, if supply ever becomes endangered, many of those industries that rely on cobalt will be unable to deliver.
Nevertheless, battery metal markets are booming on the back of rising EV sales, so supply may be pinched, but its constant demand implies it's not going anywhere.
Supply chain issues and a global rush to secure supplies have skyrocketed battery metal prices over the last couple years, and if battery metals remain expensive, a decade-long freefall in lithium-ion battery prices might come to a temporary halt.
Before the transition truly got underway, cobalt was by far the most expensive battery metal – its recorded highest-ever price was $95,250 per metric ton in 2018.
Last year, a metric ton of lithium carbonate, 1,000 kilograms, climbed to as high as $80,000, up from around $6,500 at the beginning of 2021.
However, the price of lithium has quickly fallen to more reasonable prices, perhaps due to advancements in battery technology, among other things. Comparatively, cobalt had its spike early and appears to have evened out.
These price swings are impacting lithium battery prices and, as a result, the EVs they power.
According to Visual Capitalist, based on the experience or learning curve, also known as Wright's Law, lithium-ion battery cell costs are predicted to fall 28% for every cumulative doubling of units produced.
Previously determined to accurately predict the price decline in automobiles, so far, reported battery prices have been in line with modeled forecasts utilizing Wright's Law. With the battery pack being the most expensive part of an electric vehicle, consequently, sticker prices of EVs should fall with the declining cost of batteries.
However, the infographic specialist predicted the cost of lithium-ion batteries to fall to around $100 per kilowatt-hour by 2023 – the price point at which EVs are as cheap to make as gas-powered cars – however, according to BloombergNEF, the average cost per kilowatt-hour in 2023 actually climbed to $151 from the average of $141 in 2021.
Whether the prediction model was wrong or the volatility of the market has created an anomaly, the fact of the matter is EVs aren't there yet, but the demand being driven by them is.
Despite its listed criticality, current metrics show this blue mineral is on track to break ahead of the impending demand.
According to mining titan Glencore, surging cobalt supply from Indonesia and Africa is forecast to outpace EV battery demand, generating large surpluses over the next couple of years, which will keep prices of the metal under pressure.
Shining a spotlight on the deteriorating outlook, Glencore said it would consider adding to its cobalt stockpiles and cut production to support prices.
Falling as low as $13.08 a pound in June, some of the lowest prices cobalt has seen in years and an almost 65% drop from prices seen just a month earlier, due to weak demand and growing supplies from Indonesia – the second largest producing country next to the Democratic Republic of Congo – the cobalt producer is confident it can hold out.
"There is still surplus in the market," said Glencore CEO Gary Nagle. "Taking action is something we have done before and it is something we will consider in the future ... (It) could be lower production or stockpiling for a period of time or a combination."
Easily the largest producer of cobalt globally, accounting for an average of nearly 20% of global production, if Glencore intends to keep prices competitive, it will probably happen.
Supplying roughly 43,800 metric tons of cobalt in 2022 and 21,700 metric tons for the first half of 2023, according to data from Darton Commodities, Glencore accounted for 23% of global mined cobalt supplies of more than 187,000 metric tons last year, when the market recorded a near 17,000 metric ton surplus.
"Electric vehicle use of cobalt is very strong and the forecast remains very strong," added Nagle. "Aerospace and defence are also very strong."
He also added that the use of cobalt in consumer goods had been weak but was picking up.
Surpluses are expected to remain a feature of the cobalt market as producers in Indonesia ramp up production and exports from China's CMOC Group's Tenke Fungurume mine in the Democratic Republic of Congo reach the market after a one-year stoppage caused by a dispute with the government (in 2021, Tenke Fungurume supplied 10% of the world's cobalt).
"The market is bracing itself for the release of over 15,000 tonnes of cobalt in hydroxides from CMOC's Tenke Fungurume mine," said Macquarie Group analyst Jim Lennon.
Lennon expects cobalt surpluses to amount to 8,600, 10,200, and 10,400 metric tons this year, 2024, and 2025, respectively.
"In total, there are a large number of DRC mine projects which could add 50,000 tonnes a year to supply by 2027," he added.
If plans by mainly Chinese firms to increase capacity in Indonesia are executed successfully, the Australia-based financial firm reckons cobalt supplies from the world's second-largest producer will jump to 83,800 metric tons in 2027, more than 30% of the total from 10% in 2022.
Although identified as a critical mineral by the United States and the European Union, Chinese battery producers have reportedly switched from the NMC battery chemistry to the cheaper lithium iron phosphate (LFP) batteries, which means cobalt demand is expected to grow less than previously predicted.
"To some extent substitution and the move to higher nickel and lower cobalt batteries (to boost the driving range) has been offset by higher electric vehicle sales," said Bank of America analyst Michael Widmer.
As demand for batteries sees exponential growth and the world seeks emission-free energy alternatives, batteries are an essential component of our future.
According to the World Economic Forum, it projects that the "production of minerals such as graphite, lithium and cobalt could increase by nearly 500% by 2050 to meet growing demand for clean energy technologies."
To oversee the standards of battery metals, in particular, cobalt, the Global Battery Alliance initiated the Cobalt Action Partnership.
With an estimated 50% of the world's cobalt mine reserves located in DRC, artisanal and small-scale mining has, however, been undeniably tied to human rights violations, child labor, exploitation, and forced labor – i.e., modern slavery – in this country, and this operation.
Without a spoon full of sugar, according to the Governance and Social Development Resource Centre, the Global Slavery Index (GSI) estimates there are some 45 million people in some form of modern slavery on average each year.
In the case of DRC, the GSI 2016 reported an estimated 873,100 people were enslaved, which ranked the African nation as number nine out of 167 countries for slavery.
In contrast, the 2023 GSI ranked DRC as number 97 out of 160 countries globally, a significant improvement in just seven years and optimistically a hopeful change from the spotlight being shone on it.
With earlier hits to its sales from Tesla's questionable procurement of cobalt from DRC to power its EVs, electric vehicle manufacturers determined that consumers would most likely be unhappy if they were driving cars enabled by slavery.
Thus, in 2020-2021, the GBA convened a comprehensive global stakeholder consultation process on the artisanal and small-scale mining cobalt framework as part of the Cobalt Action Partnership to immediately and urgently eliminate child and forced labor from the cobalt value chain, contribute to the sustainable development of communities, and respect the human rights of those affected.
Whether or not this action partnership had a direct influence or other factors were at play, climbing 90 ranks in seven years is a win for clean energy, but more so a win for human rights.
While efforts to curtail abuses in Africa were and are ongoing, the U.S., Canada, and other allied nations have been seeking ways to provide this valuable material domestically.
Toward this goal, cobalt hopefuls may have gotten a clue through a town in Ontario, Canada.
Aptly named Cobalt, this town is about 260 miles (418 kilometers) north of Toronto and is known for its rich stores of silver-cobalt mineralization once produced there.
Coming a long way since its First Cobalt days, the now-named Electra Battery Materials was founded in 2017 and has quickly gained traction as a likely leading provider of the critical minerals and metals that will fuel the zero-carbon future.
Starting with the acquisition of the Yukon cobalt refinery, a fully permitted processing facility in Ontario that operated from 1996 until 2015, over the ensuing years, Electra has steadily advanced into an operation that is capable of producing roughly 5,000 metric tons of battery-grade cobalt sulfate per year.
Located less than 400 miles (640 kilometers) from Great Lakes manufacturing towns such as Detroit and Buffalo, this rail-accessible refinery has garnered strong interest from battery and automotive manufacturers seeking a secure and sustainable supply of this controversial battery metal.
With the first mover advantage of the first cobalt sulfate refinery in North America, Electra has quickly carved itself a position in the low-carbon energy and transportation transition for years to come. And with plans to expand into alternate recycling technologies, such as solvometallurgy, as well as black mass material recovery, Electra is well on its way to helping the West break away from its reliance on the East.
To further cement its growing space in the North American cobalt domain, in September 2022, Electra caught the attention of one of the world's largest lithium-ion battery companies, LG Energy Solution, and immediately struck back-to-back deals to source battery-grade cobalt and lithium from the province.
Aimed at securing the materials needed for the batteries powering North America's rapidly growing EV market, LG Energy Solution agreed to buy battery-grade cobalt from Electra Battery Materials Corp.'s emerging battery materials park in Ontario and battery-grade lithium hydroxide from the Thunder Bay facility that Avalon Advanced Materials Inc. is developing in the province.
"As we have recently announced our mid- to long-term strategy to focus on North America, the fastest growing EV market, these partnerships serve as a crucial step towards securing a stable key raw material supply chain in the region," said LG Energy Solution CEO Youngsoo Kwon.
"By constantly investing in upstream suppliers and establishing strategic partnerships with major suppliers of critical minerals, LGES will continue to ensure the steady delivery of our top-quality products, thereby further advancing the global transition to EVs and ultimately to a sustainable future," he added.
Piggybacking off this agreement, the companies announced that Electra would supply LG Energy Solution with 3,000 metric tons of cobalt contained in a cobalt sulfate product in 2025 and an additional 4,000 metric tons in each of the following years through 2029 for a total of 19,000 metric tons, nearly triple the 7,000 metric tons from the initial deal.
"LG Energy Solution continues to strengthen its position as a global leader in the electric vehicle supply chain through its investments in Ontario and active collaboration with Canadian companies developing critical minerals and battery materials," said Electra Battery Materials CEO Trent Mell.
As a top electric vehicle battery manufacturer, which supplies Tesla and other automakers, LG Energy Solution has been positioning itself to better provide the critical component to EVs, and by investing in the first and currently only cobalt refinery in the West, it has sounded out one of the first breakaways of imported critical minerals for North America, and hopefully, signals that many more are yet to come.
Reader Comments(0)