Fri. Apr 10th, 2020

Cobalt rises like foam thanks to the push of the electric car | Economy

Cobalt rises like foam thanks to the push of the electric car | Economy

Cobalt is in the bowels of smart phones, laptops, digital cameras, bluetooth speakers. For now it is irreplaceable: it increases the performance of rechargeable batteries and makes them more durable. Today, everyone, without realizing it, has taken a piece of this material, which is causing an unusual uproar among technology companies, car manufacturers, mining companies and various governments on the planet that have described the metal as "key" to its economy. The causes? A possible shortage of the raw material combined with the growing demand of mobile devices and electric vehicles has catapulted the price of the mineral up to the clouds.

Glencore controls 22% of the world's mineral extraction, centered in Africa

In March of this year, a kilogram of cobalt cost 95 dollars (82.3 euros, at the current exchange rate). Last week it was around 62 dollars (54.4 euros), almost three times more than two years ago, when the mineral touched its minimum price of the last decade: 22 dollars (18.9 euros), according to the market data of metals of London. "Metal prices have extended at the beginning of this year their upward trend that began in early 2016 as a result of strong demand, limited availability of material and an increase in investor purchases," sums up Caspar Rawles, analyst at the British consultancy Benchmark Mineral Intelligence. Until recently, cobalt – also used in superalloys for gas turbines, spacecraft, rocket engines and nuclear reactors – sailed through less turbulent waters.

Limited production

Now almost the same amount that is extracted is consumed. The arrival of lithium-ion batteries has revolutionized the market. More than 50% of the cobalt (byproduct of copper and nickel extraction) is used in the manufacture of these energy storage tanks. In 2006, only 20% were destined for them. The frenzy of recharge is in full boil. In a mobile, for example, there are between five and ten grams of this material, in a laptop between 30 to 50 grams, while an electric vehicle contains between five and 15 kilograms, details Rawles.

The epicenter of this revolution is in Africa. In the Democratic Republic of the Congo – where Amnesty International has denounced the employment of children and the violation of workers' human rights in some mines – almost 70% of the mineral used in the world is obtained, according to Cobalt27, a Canadian firm owner of one of the largest cobalt private reserves in the world.

Marked by wars, political instability and poverty, the Congolese nation (with the largest reserves of this raw material) has a Swiss king: Glencore, which controls the extraction of cobalt, with a 22% share. Far behind is state miner Gecamines (with 9% of the market) and China Molybdenum (with 7%), according to McKinsey figures. "Metal has become a strategic element for the world," says Michael Hollomon, CEO of Missouri Cobalt. This American company is preparing to exploit one of the largest reserves in the United States, a country that last February has included this element among the 35 "key" minerals for the development of its economy. China has an advantage in the race: it controls more than 60% of the refined cobalt that is distributed on the planet and this percentage is expected to increase, explains Jack Bedder, economist at the Roskill analysis firm.

Tesla has managed to reduce its use by 60% in the batteries used by its vehicles

"If you want to be the king of the world in the next 10 years, you must have cobalt," Jean-Luc Kahamba Kukenge, deputy director of the Congolese mine Commus Global, told Fortune last August. The great catalyst of this fever has its name and surname: the electric vehicle, which is gaining ground in the plans of large companies that do not want to lose rope. It is not for less. The forecasts are juicy. According to McKinsey, the global production of these cars (including hybrids) will go from 3.2 million units registered in 2017, to almost 18 million at the end of 2025, with China leading the way in both manufacturing and consumption. .

Essential in batteries

In the battery of a car, depending on its technology, we can find a mixture of rare earths (a series of 15 minerals that have chemical, electrical, electronic and magnetic properties), cobalt, nickel, magnesium, aluminum, phosphate and, obviously, lithium. 97% of this last mineral is extracted from Australia, Chile (with the largest reserves), Argentina and China. After extraction, most of the raw material is converted into lithium carbonate or lithium hydroxide. The price of lithium carbonate in Asia, for example, has grown by 93% and in South America by 120% in the last two years. But its cost has been declining over the past few months, as there is an oversupply and a large number of projects under development, according to Reuters experts.

The International Energy Agency (IEA), however, is more ambitious: by 2030 the number of electric vehicles on the planet will reach 125 million, which could increase between 10 and 25 times the current demand for cobalt. "The question is: will it be possible to keep pace with the supply?" Bedder argues. The answer is an unknown. "I do not think there is necessarily a risk of shortages, at least in the next five years. There are many new mining projects in progress. But beyond the second half of the next decade, nothing is clear, "says George Heppel, analyst at the consultancy CRU.

Faced with this scenario, large companies begin to move tab. BMW, Volkswagen and Apple, for example, have entered into conversations with the main producers. Tesla, on the other hand, has reduced by 60% the use of the material in the batteries of its cars. Experts are looking for a substitute, but the results are not yet fruitful, explains David Weight, president of the Cobalt Development Institute. "Until now, there are no viable alternatives that can replace this option."


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