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A unit of Chinese battery materials producer Greatpower on Monday said it was declaring force majeure on deliveries of cobalt sulphate after a covid-19 outbreak in Zhejiang province forced production to be suspended.
More than a dozen companies in Zhejiang, eastern China, have halted production in response to tightened curbs after the province reported 173 locally transmitted coronavirus cases with confirmed symptoms over Dec. 6-12.
“Currently, production and work have been suspended,” a Zhejiang unit of Greatpower said in a notice to customers, which the company shared with Reuters.
Greatpower has monthly capacity to make 3,000 tonnes of cobalt sulphate, a key ingredient in batteries for electric vehicles (EVs), in the Zhejiang city of Shaoxing.
“According to the relevant laws and regulations … the novel coronavirus outbreak is recognised as a force majeure event,” the notice said.
Force majeure is a clause that, when invoked, allows companies to suspend their obligation to fulfil contracts after unexpected events such as strikes and natural disasters.
The notice said Greatpower has been unable to deliver product to customers at the agreed time since Dec. 11 and pledged that the company would take steps to reduce any adverse impact when production resumes.
Chinese metals research house Antaike said in a note that there were two cobalt chemical producers affected by the Shaoxing measures. It did not name either company but said it expects the impact to last at least a month and to reduce monthly output by 1,200-1,500 tonnes on a metal content basis.
Prices are expected to rise in the near term and EV battery makers will feel the shortages, it said.
“Even if the epidemic is brought under control, it will be difficult to reach full production immediately,” Antaike added.
(By Tom Daly; Editing by David Goodman)
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