Battery Metals

Cobalt Investing

Belgium-based battery producer Umicore expects recycling to become a growing source of cobalt for the market in the next decade.

Recycling cobalt from used smartphones could be the answer to powering millions of electric cars in the next decade.

As demand for electric vehicles continues to increase and automakers look to secure long-term supply of battery metals, Belgium-based producer Umicore (EBR:UMI) expects recycling to become a growing source of cobalt.

“There is an amazing mine of cobalt that is totally untapped,” Umicore Chief Executive Marc Grynberg told the Financial Times on Monday (February 12). He added that around 10 percent of global production goes into smartphones, and if it is not extracted from dead batteries, that cobalt is lost forever.

“We have billions of dismissed end-of-life smartphones …. That could be utilised to power millions of electric vehicles. Millions,” Grynberg noted. “If there is one thing that needs to be done … starting now is to make sure there are mechanisms in place to motivate people to return their disused smartphones.”

One option could be a non-refundable deposit on the purchase of a phone, Grynberg suggested. Currently only around 5 to 10 percent of smartphones are collected for reuse and recycling.

In order to meet increasing demand for electric car batteries, cobalt supply will need to reach 180,000 tonnes by 2026, up from 48,000 tonnes in 2016, Benchmark Mineral Intelligence says. By that time, recycling will start to make up a growing portion of supply, Grynberg added.

Umicore is not the only firm that believes cobalt recycling could help balance the potential deficit in the market. On Tuesday (February 12), Samsung SDI (KRX:006400) announced plans to recycle cobalt from used smartphones in order to reduce dependence on the Democratic Republic of Congo. More than 50 percent of cobalt comes from DRC, but mining in the country has been linked to human right abuses.

Samsung SDI plans to buy a stake in a company with recycling technology and is aiming to sign a deal to ensure long-term cobalt supply, Bloomberg reported. According to CRU Group, cobalt from dead batteries could add 25,000 metric tons of supply by 2025.

So far, Samsung SDI has yet to confirm which company it is in talks with, but it has mentioned Umicore and American Manganese (TSXV:AMY) as leading recycling firms.

Despite the increasing need for cobalt forecast by analysts, many believe that the metal’s use in batteries will decrease in the near future. In fact, firms such as SK Innovation (KRX:096770) and LG Chem (KRX:051910) have recently outlined plans to produce batteries containing 80 percent nickel, 10 percent cobalt and 10 percent manganese.

Speaking about the potential increase of nickel in batteries, Grynberg said that doing so could have an impact on battery cycle life, or the ability to charge fast, as it would reduce battery stability.

“Cobalt is the element that makes up for the lack of stability of nickel. There isn’t a better element than nickel to increase energy density, and there isn’t a better element than cobalt to make the stuff stable. So [while] you hear about designing out cobalt, this is not going to happen in the next three decades. It simply doesn’t work,” he explained.

On Tuesday, Umicore’s share price closed down 0.13 percent, at 47.20 euros. The company’s share price has increased almost 20 percent year-to-date.

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

Editorial Disclosure: American Manganese is a client of the Investing News Network. This article is not paid-for content.


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