Roskill

Record Cobalt Deals in Q1 2018 Show Raw Material Procurement of Li-ion battery Business is Revving up

LONDON, April 18, 2018 /PRNewswire/ --

The lithium-ion (Li-ion) battery industry has developed rapidly in recent years with the advent of mass-produced electric vehicles, with predictions that its requirement for lithium and graphite could increase five-fold within the next decade while other metals like nickel and cobalt are expected to increase nine-fold and four-fold, respectively, reflecting changes in cathode chemistry.

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There is now a significant wave of interest in battery raw material supply security, mainly from Asia, to underpin the growth of Li-ion battery production over the next decade. At least 12 recorded lithium and six cobalt transactions have been closed between downstream manufacturers and mining companies since 2016, signalling a changing trend in procurement strategy.

With an increasing amount of Li-ion battery raw material refining and processing centred in China, and it being front-and-centre of Li-ion demand growth, Chinese Li-ion value chain participants have turned to Australia, Africa and South America to secure the feedstock necessary for their downstream requirements. While some cathode manufacturers, battery makers, and even auto OEMs, closed or tried to close several lithium supply deals in 2017, cobalt- and nickel- related transactions seem to be taking over in 2018, perhaps with the realisation that future cobalt and nickel supply is not as secure as lithium and graphite.  

The recent spree of deals by Korean companies suggests they are now becoming aware, and while Japan has only dabbled to-date it may be next, meanwhile European automakers have been hot on raw material PR but have yet to strike an agreement.

Cobalt takes centre stage 

In 2016, the procurement rush started with several lithium projects; such as BYD's deal with Qinghai Salk Lake Industry Group, followed by the US$32M deal between battery maker Optimum Nano and Australian lithium mine developer Altura. The year 2017 saw deals between Great Wall and Pilbara Minerals, and Ganfeng Lithium's US$172M financing of Lithium Americas. Since the beginning of 2018, other players such as cathode manufacturer Posco and Japan's SoftBank group struck deals with Pilbara Minerals and Nemaska Lithium, respectively.