ERG: Cobalt to Benefit from Europe’s Push for EVs

Cobalt is set to benefit from Europe’s post-COVID-19 plans, which have put electric vehicles (EVs) at the center of its economic recovery.

The EU’s green plan, which aims to create a climate-neutral economy in Europe by 2050, has injected significant confidence into the global cobalt market, according to Benedikt Sobotka, CEO of cobalt producer Eurasian Resources Group (ERG).

“(It) has also renewed momentum for responsible sourcing across the whole supply chain,” he said.

Responsible sourcing has been a main topic of discussion in the space for some time now, with artisanal mining under the spotlight.

“We take particular note of recent reports and commitments to remove artisanal mine supply from value chains,” he said. “If this is widely embraced across the industry over the course of the coming months, the cobalt market would rapidly move into deficit.”

According to Sobotka, recent government and industry association initiatives across the EU may also provide the boost required to put a floor on cobalt prices — which are far away from the highs seen in 2017 and early 2018.

Europe has also taken steps to build out its own EV battery supply chain, with a focus on megafactories. Benchmark Mineral Intelligence estimates that the region will account for almost 17 percent of the total battery capacity in 2030, although still very far away from China, which dominates the space.

For Sobotka, cobalt will also benefit from Europe’s transformation into a battery powerhouse, as automakers will be expected by European governments to make corresponding investments in European battery materials and cell manufacturing. Meanwhile, the EU is looking to double investments to address the charging infrastructure gap.

“The timing is perfect — European automakers that have geared up to the launch of EVs over the past few years are now nearing the launch moment and in a position to reap the benefits of a whole range of supportive prospective policies,” he said.

Sobotka also pointed out that EV sales in Europe are reaching record levels in terms of penetration rates. “While internal combustion vehicle sales slumped so far in 2020, EV sales have performed better than ever,” he explained.

Citing data from EVVolumes.com, the CEO of ERG said over the January to April period in 2019, 172,000 battery and plug-in hybrid EVs were sold across Europe. In 2020, sales reached 269,000 vehicles over the same period, which comes to year-on-year growth of 56 percent.

In the Democratic Republic of Congo, ERG mines copper and cobalt, processing the ore at the Boss Mining, Frontier and Comide operations. Additionally, the company has a number of development and near-production assets in the African country. In Zambia, ERG owns Chambishi Metals, its central cobalt and copper refinery.

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