Asian companies are attempting to use more nickel for batteries used to power mobile phones and electric cars to cut costs.
Lithium-ion batteries require nickel manganese and cobalt for the cathode component but the price of cobalt has doubled over the past year and averaged $58,549 per ton in July on higher demand for the batteries from electric vehicles and a supply shortage. About 60 percent of the world’s cobalt comes from Democratic Republic of Congo, which is facing a spike in protests and arbitrary arrests after the country’s president decided to postpone elections. U.N. commissioner for Human Rights, Zeid Raad Hussein called the country a “landscape of horror.” The country’s instability raises concerns over the security of the cobalt supply.
Nickel has rallied about 18 percent over the past month and reached a five-month high this morning (August 3) of $10,445 on the London Metal Exchange (LME). Indonesia has partially reversed a ban on the export of unprocessed minerals, which helped support the construction of new smelters in the country. However, an uptick in supply from Indonesia is being offset by less supply from the Philippines, which has not yet fully recovered from the shuttering of mines by the country’s previous environmental secretary Regina Lopez.
Still, nickel remains substantially cheaper than cobalt. Several firms told Reuters they want to change the ratio of each metal used to reduce the amount of cobalt required in each battery. The current ratio of metals used in lithium-ion batteries is 60 percent nickel, 20 percent cobalt and 20 percent manganese.
South Korea’s SK Innovation (KRX:096770) is considering using 80 percent nickel, 10 percent cobalt and 10 percent manganese in the cathode components instead. Panasonic (TYO:6752), LG Chem (KRX:051910) are working to reduce the amount of cobalt in the batteries as well and Samsung SDI (KRX:005930) said it expects the amount of cobalt per battery unit to decrease in the long term by about half of current levels.
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Securities Disclosure: I, Melissa Shaw, hold no direct investment interest in any company mentioned in this article.