VIDEO - Cobalt Price Recovery Continues, Lithium Players Optimistic Long Term

September was another interesting month for battery metals, which have been hurt by negative sentiment and falling prices so far in 2019.

Earlier this year, the London Metal Exchange (LME) announced plans to ban metal tainted by human rights abuses in 2022, including cobalt, but in September sources told Reuters that the exchange could postpone the deadline by three years, giving producers more time to comply with guidelines and allowing the exchange to rethink its approach.

The proposed rules would see all LME brands go through a red flag assessment, to be based on guidance from the Organization for Economic Co-operation and Development.

In news from battery makers, Umicore (OTC Pink:UMICF,EBR:UMI) joined forces with LG Chem (OTC Pink:LGCLF,KRX:003550) to supply nickel-cobalt-manganese cathode material for battery production.

“This supply agreement will support LG Chem in meeting the growing demand for rechargeable lithium-ion batteries as car manufacturers are expanding their offering of longer-range electric vehicle models in several regions,” Umicore said in a press release.

In May, Umicore signed a long-term deal with Glencore (LSE:GLEN,OTC Pink:GLCNF) for cobalt supply from the mining giant’s operations in the Democratic Republic of Congo, which Umicore said at the time meets the company’s responsible sourcing standards.

Last month, LME cobalt continued to trend higher, reaching a high of US$37,000 per tonne. The recovery started in August after Glencore announced its Mutanda mine will close at the end of the year.

Looking over to what happened in the lithium space, top producer SQM (NYSE:SQM) said it is set to invest US$1.33 billion into its operations in Chile and Australia in the next five years, as the miner remains optimistic about the outlook for the battery metal. Despite the current market environment, which has seen prices decline from the highs seen in 2017 and 2018, Chile’s SQM forecasts solid demand for lithium in the coming years.

“The fundamentals support a vision of significant growth in the coming years,” said SQM Senior Vice President Pablo Altamiras.

Meanwhile, Chinese producer Tianqi (SZSE:002466) has put its expansion plans for its lithium hydroxide plant in Western Australia on hold to focus on steady production. Tianqi launched production at its Kwinana chemical facility early in September, with ramp up estimated to take 12 to 18 months.

“All of our focus for the coming months is on getting Stage 1 into steady production and all resources have been channeled toward this,” said Tianqi General Manager Phil Thick in a statement. “Once we have achieved this, we will return our focus to completion of Stage 2 as customer demand continues to build.”

In September, China’s largest electric vehicle battery maker announced plans to buy an 8.5 percent stake in Australian lithium miner Pilbara Minerals (ASX:PLS,OTC Pink:PILBF) for AU$55 million. The strategic investment from CATL (SZSE:300750) is part of Pilbara Minerals’ fundraising efforts to further develop its Pilgangoora lithium-tantalum project in Western Australia. The company is looking to raise a total of AU$91.5 million.

“The strategic relationship combines Pilbara Minerals’ expertise in mining, development and upstream spodumene production with CATL’s expertise in downstream processing and its strong customer relationships with electric vehicle manufacturers,” Pilbara Minerals Managing Director Ken Brinsden said.

Looking over to North America, Nemaska Lithium (TSX:NMX,OTCQX:NMKEF) is facing another financing challenge after announcing US$350 million in bonds will be repaid due to a delay in construction at its Whabouchi mine. The bonds were part of Nemaska’s C$1.1 billion financing efforts last year to develop its project in Quebec, with mine construction originally set to be completed in October 2019.

“We have solid relationships with our strategic partners and stakeholders and are confident that we should be able to put everything in place to successfully complete the construction and commissioning of the project as expected,” Nemaska Lithium President and CEO Guy Bourassa said.

Meanwhile, lithium junior E3 Metals (TSXV:ETMC,OTC Pink:EEMMF) joined forces with top producer Livent (NYSE:LTHM) to develop a direct lithium extraction process. Livent will contribute up to US$5.5 million and its technical expertise to develop a process to produce battery-quality lithium products from E3’s petrolithium brines in Alberta.

“There are few companies in the world that have the lithium production expertise Livent possesses. We believe this collaboration will accelerate the advancement of the innovative technology we have developed to date,” said E3 Metals President and CEO Chris Doornbos.

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

Editorial Disclosure: Nemaska Lithium and E3 Metals are clients of the Investing News Network. This article is not paid-for content.