London-based Vedanta Resources is studying how to produce cobalt for use in batteries to take advantage of the electric car revolution.
Another diversified miner is betting on the electric car revolution and surging demand for metals such as cobalt.
London-based Vedanta Resources (LSE:VED) is now studying how to produce cobalt for use in batteries, CEO Tom Albanese said on Tuesday (August 15).
The company currently mines cobalt as a by-product of copper, producing a total of 1,000 tonnes of cobalt-copper alloy per year. But increasing demand for electric vehicles (EVs) has prompted the company to look at producing cobalt suitable for the lithium-ion batteries that power them.
“As cobalt is becoming more exciting, we are looking to determine the right engineering solution to produce cobalt [for batteries] rather than a copper-cobalt alloy,” Albanese told Reuters.
In Zambia, Vedanta subsidiary Konkola Copper Mines operates three mines near the Democratic Republic of Congo, the world’s largest cobalt-producing country. In March, Vedanta announced plans to invest $1 billion to continue to upgrade and expand the business.
Going forward the company aims to produce 3,000 to 4,000 tonnes of pure cobalt per year, it said in a conference call.
Vedanta’s move comes after the news that many car manufacturers, including Volvo (STO:VOLV) and BMW (ETR:BMW), will electrify most of their models by the end of the decade. What’s more, countries around the world, including the UK and France, have outlined plans to ban fossil fuel cars and shift to EVs.
Demand for cobalt is expected to jump 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.
Vedanta is not the only diversified miner hoping to take advantage of the electric car revolution. Earlier this year, Swiss giant Glencore (LSE:GLEN) upped its stake in two copper-cobalt operations in the DRC, Katanga Mining and Mutanda Mining, investing $960 million. In July, the company signed a massive cobalt deal with a Chinese firm.
“The potential large-scale roll-out of electric vehicles and energy storage systems looks set to unlock material new sources of demand for enabling underlying commodities, including copper, cobalt, zinc and nickel,” Glencore CEO Ivan Glasenberg said during a conference call last week.
Glencore’s share price has surged more than 19 percent this year, beating many of its competitors, including Vedanta, in part because of its narrative on electric cars, analysts have said.
Vedanta, which continues to face challenges in Zambia, has seen its share price decline 20 percent year-to-date. At close of day in London on Tuesday, Vedanta was trading at GBX701.83.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.