Glencore's Cobalt Sale Helps China's Drive to Build Electric Vehicles
March 14 2018 - 5:10PM
Dow Jones News
By Scott Patterson
Glencore PLC has agreed to sell a large chunk of its cobalt
production to a Chinese company, a person familiar with the matter
said, marking another victory for China in a race to lock up
supplies of an important metal used in batteries for electric
vehicles.
Glencore, the giant Swiss commodity producer and trader, signed
a deal several weeks ago to provide more than 50,000 metric tons of
cobalt over three years to GEM Co., a Shenzhen-listed chemicals
firm, the person said. Glencore is the world's biggest cobalt
producer, and the amount represents about a third of its production
over the course of the deal.
Once an obscure metal in a relatively small market, cobalt is
now projected to be in greater demand as electric-car production
increases and smartphone use grows around the world. The scarce
blue metal is an essential ingredient in lithium-ion batteries
because of its ability to absorb high levels of heat.
Apple Inc., Tesla Inc., Volkswagen AG and other large companies
have been scrambling to secure their own cobalt supplies from
sources including Glencore, the company's chief executive, Ivan
Glasenberg, said on a conference call in December.
"Electric vehicles will be disruptive to the world," Mr.
Glasenberg said. "Cobalt is basically off the charts."
China is revving up its electric-vehicle industry, the largest
in the world. The country has focused on dominating cobalt
resources in the Democratic Republic of Congo, which turns out
about 60% of the world's supply.
In 2011, Beijing listed electric vehicles as one of seven
"strategic emerging industries." Chinese firms produce about 77% of
refined cobalt chemicals, up from 67% in 2012, according to London
commodities researcher CRU Group.
Glencore has two giant mining operations in Congo and controls
about one-quarter of cobalt output world-wide. Glencore has said
its Katanga Mining operation in Congo is expected to produce 34,000
tons of cobalt by 2019, likely making it the most productive cobalt
mine in the world.
A report, commissioned by Glencore and issued by CRU, forecast
that by 2030 the demand for cobalt to be used in electric vehicles
could reach 314,000 metric tons, more than four times the current
global supply.
One potential obstacle to gaining Congolese cobalt is the
country's government, which is ratifying a new mining code over the
objections of Glencore and other companies. The code scraps
protections for mining companies and adds higher taxes and
royalties for copper and cobalt.
"It's going to create underinvestment in the country," Mr.
Glasenberg said last month.
Write to Scott Patterson at scott.patterson@wsj.com
(END) Dow Jones Newswires
March 14, 2018 16:55 ET (20:55 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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