Supply Chain Matters highlights a related development to our prior published blog: Volkswagen Reiterates Aggressive Electric Automobile Production Plans. That development is continued efforts by China based battery producers to secure longer-term supplies of all-important cobalt, an essential metal required in the design and production of rechargeable batteries.

The Wall Street Journal, citing informed sources, is reporting (Paid subscription required) that Europe based global mining company Glencore PLC has agreed to sell a considerable supply of cobalt production to a Chinese company. The deal reportedly involves the supply of more than 50,000 metric tons of the metal to GEM Company, a Shenzhen-listed chemicals firm.

Glencore, is noted as the world’s largest cobalt miner and the cobalt amount contracted reportedly represents about a third of its production capacity over the course of the contract.

This latest report follows a mid-February WSJ report indicating that: “There is a worldwide race to lock-up the supply chain for cobalt, which will likely be in even greater demand as electric-car production rises.” Global prices for cobalt have more than doubled in the past twelve months due to increasing demand from the auto industry. The February WSJ report cites a commodities industry consultant at CRU Group as indicating the companies within China dominate the first steps in the lithium-ion battery production process. Noted is that Chinese imports of cobalt from the Democratic Republic of Congo, representing 54 percent of global cobalt supply, totaled $1.2 billion in the first nine months of 2017, compared with just $3.2 million by India, the second-largest importer.

It would appear from various industry observers that China’s strategy is to strategically support design and production of nickel manganese cobalt batteries which provide a higher energy density, providing autos with greater driving range.

Meanwhile, the Congo government, to the chagrin of mining companies, is set to ratify a new mining code allowing for higher taxes and royalties from the extraction of cobalt.

Indeed, this a period of electrified automobile product value-chain strategy moves, and the stakes are high from a country, industry, and individual brand perspective.


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