VIDEO ― Battery Metals Update June 2019

At the very end of last May, the cobalt space saw top producer Glencore (LSE:GLEN,OTC Pink:GLCNF) sign a long-term deal to supply the metal to Umicore (OTC Pink:UMICF,EBR:UMI) — Europe’s largest producer of battery materials for electric vehicles (EVs).

The cobalt will be sourced from Glencore’s two large copper-cobalt mines in the Democratic Republic of Congo (DRC), Kamoto and Mutanda.

Umicore said Glencore’s operations meet its procurement standards, which exclude artisanally mined cobalt as well as cobalt mined using child labor. 

On June 27, a partial mine collapse was reported at Kamoto Copper Company’s KOV copper-cobalt mine in Southeast Democratic Republic of Congo (DRC). According to Glencore, the collapse has left at least 19 miners dead, but there could be more.

The statement from the major miner explains that the company has experienced a growing trend of illegal artisanal miners at its various mining concessions through Kolwezi, the capital city of Lualaba province. According to Glencore, an average of 2,000 illegal miners intrude on the concessions daily.

In other company news last month, mining investment company Pala Investments announced it will pay C$501 million to acquire battery metals royalty and streaming company Cobalt 27 Capital (TSXV:KBLT,OTCQX:CBLLF). As a result of the transaction a newly listed company will be created called Nickel 28. The name references nickel’s number on the periodic table.

“Nickel will be an increasingly critical component of the electric battery revolution, and the creation of Nickel 28 provides shareholders with significant incremental value and continued exposure to the strong fundamentals of battery metals,” said Anthony Milewski, chairman and CEO of Cobalt 27.

Cobalt prices have continued to decline last month from the highs seen at US$40 per pound to around the US$14 to US$15 per pound range as we enter the typically slow summer season. Market participants point to a surge in supply of the metal in the DRC, with traders having a difficult time selling cobalt to Chinese buyers.

In June, one of the biggest news in the lithium space was the announcement that the London Metal Exchange decided to join forces with price reporting agency Fastmarkets to develop a lithium futures contract. The move is expected to bring more transparency to lithium prices, which have been under pressure in the past several months.

However, producers were quick to state that they are hesitant about this move, with top producer Albemarle (NYSE:ALB) rejecting to provide price information or contribute to the contract.

“For us, a price index goes against that strategy, a price index tends to support a commodity market, and that is not what we believe lithium is … (That’s why) Albemarle will not be providing price information to the index,” David Ryan, Albemarle vice president of corporate strategy and investor relations, said.

In other news, Toyota Tsusho (TSE:8015) said it would take at least two more years to properly assess the global EV market’s direction before deciding to further expand supply.

The Japanese company currently produces about 15,000 tonnes of lithium carbonate at its plant in Argentina through a joint venture with Australian miner Orocobre (ASX:ORE,TSX:ORL,OTC Pink:OROCF).

“Our cost is very low, so we’re very competitive … If we need more production, the resources are there. We just need to build another plant,” Masaharu Katayama, head of the company’s strategic metals unit, told Reuters in an interview.

Toyota Tsusho is part of the Toyota Group headed by Toyota Motor (NYSE:TM), which in June said it aims to get half of its global sales from EVs by 2025 — five years ahead of schedule.

Looking over to Australia, Pilbara Minerals (ASX:PLS,OTC Pink:PILBF) reported record monthly production at its Pilgangoora project in Western Australia.

But the company’s major offtake customers for Stage 1, China’s General Lithium and Ganfeng (OTC Pink:GNENF,SZSE:002460), have been taking longer than expected to ramp-up new chemical conversion facilities in China, forcing Pilbara to limit production in June.

In June, INN was at the Lithium Supply and Markets conference in Chile, where we talked to experts and company executives including Chris Berry of House Mountain Partners, Joe Lowry of Global Lithium, Howard Klein of RK Equity and many more. Check out all our interviews here.

Don’t forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.