Manganese Miner South32 Eyes Cobalt to Jump into EV Market

The diversified miner is looking to add cobalt and base metals assets to its portfolio. South32 already has manganese, aluminum and nickel properties.

south32

South32 (ASX:S32) is looking to increase its exposure to battery metals and jump into the electric vehicle (EV) market, the company said on Thursday (August 24).

The diversified miner is seeking to add cobalt and base metals assets to its portfolio. The company already has manganese, aluminum and nickel properties.

“If you look at the metals we produce, they are either used in renewables or battery technology,” South32 Chief Executive Graham Kerr said. “We are looking to add more base metals exposure to the group … We do see battery technology having an impact over time.”

Cobalt is a critical component of lithium-ion batteries, and demand is expected to surge from 46,000 tonnes in 2016 to 76,000 tonnes by 2020. In fact, many experts predict the market will be in deficit by the end of the decade.

That’s because soaring demand for EVs is seen pushing demand for lithium-ion batteries above 400 GWh by 2025, Benchmark Mineral Intelligence says. Lithium-ion batteries contain about 11 kilograms of cobalt each.

“We’d like [cobalt] in the portfolio,” Kerr told the Financial Times, adding that the company wants to add the metal as part of a copper and nickel asset, as cobalt is mined as a by-product.

Almost 60 percent of the world’s cobalt is produced in the politically unstable Democratic Republic of Congo (DRC), the top cobalt-producing cobalt country by a long shot. But Kerr said, “[the] DRC is not a place we can operate in and maintain standards.” He explained that South32 will likely look to mine the metal in Australia or South Africa.

The company is joining other miners who have already outlined plans to develop metals used in EV batteries. Earlier this year, Swiss giant Glencore (LSE:GLEN) upped its stake in two copper-cobalt operations in the DRC, investing $960 million. And just last month, the company signed a massive cobalt deal with a Chinese firm.

Similarly, London-based Vedanta Resources (LSE:VED) said it is studying how to produce cobalt for use in batteries. The company commented in a conference call earlier this month that it will aim to produce 3,000 to 4,000 tonnes of pure cobalt per year.

Most recently, major miner BHP Billiton (NYSE:BHP,LSE:BHP,ASX:BHP), which is on track to exit the US oil and gas business in the next couple of years, said it will invest heavily in its nickel operations to take advantage of the EV revolution.

On Thursday, after reporting a $1.6-billion profit and sharing its plans to join the EV race, South32’s share price closed in London at GBP 2.94 — a gain of 1.73 percent. The company’s share price has jumped 6.91 percent since January.

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

 

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