Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
LONDON, June 14 (Reuters) – Panasonic Corp expects to more than triple its cobalt consumption in five years’ time, industry sources said, even as the company aims to develop cobalt-free automotive batteries in the near future.
Panasonic is the exclusive battery cell supplier for all new Tesla vehicles, including the mass-market Model 3 electric car. Sources say cobalt-free batteries are many years away.
The scramble to secure supplies of cobalt, which stabilises and extends the life of lithium-ion rechargeable batteries used to power electric vehicles, has seen prices rise to around $40 a lb from below $10 a lb in December 2015.
Japanese battery maker Panasonic has been trying to secure supplies in the physical cobalt market, cobalt industry sources said, adding the company expects to use 10,000 tonnes next year and in 2020 and up to 25,000 tonnes per year by the early 2020s.
Its consumption this year will be about 8,000 tonnes, the sources said.
In response to requests for comment, Panasonic said it does not reveal details of its procurement plans.
“That 25,000 tonnes is a much bigger number than anybody expected. I suspect they are very concerned about cobalt supplies in the future,” a source at a cobalt producer said.
A cobalt industry source said: “Panasonic are normally very cautious and conservative about their estimates. If anything, they talk it down. The 25,000-tonne number came as a shock to us.”
Tesla’s target is to produce 5,000 Model 3s a week by the end of June. Tesla Chief Executive Elon Musk recently told analysts on the company’s first-quarter results call: “We think we can get the cobalt to almost nothing.”
“We think we can get the cobalt to almost nothing.”
Tesla batteries use the NCA or lithium, nickel, cobalt and aluminium formula, while other car manufacturers have chosen to go with lithium, nickel, cobalt and manganese (NCM) compounds.
Automakers are accelerating their electric-vehicle plans including Volkswagen, Europe’s largest automaker, which has picked partners to provide battery cells and related technology worth around 20 billion euros ($23.3 billion).
BMW AG plans to bring 25 electrified models to market by 2025 and will increase research and development spending to an all-time high of up to 7 billion euros this year.
Metals consultancy Roskill estimates cobalt demand at 310,000 tonnes by 2027, of which more than 240,000 tonnes will come from batteries used in electric vehicles, laptops and mobile phones. Roskill estimates cobalt demand last year at 118,000 tonnes.
Worries about cobalt shortages have prompted many to seek to alter the composition of the cathode part of the NCM battery to eight parts nickel, one part cobalt and one part manganese from a ratio of 6:2:2.
“There’s a lot of noise about 8:1:1, but they haven’t managed to make it work yet. Zero cobalt is even further away,” the cobalt industry source said.
According to consultants Benchmark Minerals, the 8:1:1 formula is being piloted and tested at small plants, particularly in China, but is years from full commercial application. ($1 = 0.8589 euros)
(Reporting by Pratima Desai; Additional reporting by Makiko Yamazaki in Tokyo; Editing by Veronica Brown and Dale Hudson)
