Wednesday, June 13, 2018

"Tesla leads electric vehicle race to cut cobalt dependency" (TSLA)

One of the reasons cobalt prices are rolling over, the other being supply coaxed onto the market by the quadruple in prices. it was a good run, funny how this commodity stuff works, what with the supply and the demand and the substitutions and the....

First some background. From last year's "Electric Vehicles: An Old Pro On Battery Technology and Policy and China" (cobalt percentage in blue, naturally):
Let’s look at the critical natural resources necessary for producing lithium ion batteries that can give a one to two ton motor vehicle a range of 300 km or more; these would be of the of the NCA, nickel-cobalt-aluminum cathode type such as is used by the Tesla corporation....;h=383

Don't worry if you can't read the graphic, it's from a dandy piece that Visual Capitalist did in 2016, click through for the whole thing.
The point is that the chemistry of the Tesla/Panasonic lithium-ion batteries was already on the low end of cobalt use compared to the cathodes in, say, the iPhone.

But, because the Chinese pretty much locked up supply* from current producers, prices were heading up fast and even worse, it is tough to get the stuff regardless of the price you are willing to pay. Which is why last August we were posting "Batteries: Manufacturers Are Reducing the Amount of Cobalt Used In Electric Vehicles".
The evolution of Tesla’s cobalt use over time. [Credit: Benchmark Mineral Intelligence]

So, with that in mind, here's the latest from Reuters, June 6:
If Elon Musk had his way, there would be no cobalt in any of the batteries powering the next generation of Tesla.

At the very least, “we think we can get the cobalt to almost nothing”, he told analysts on the company’s first quarter results call.

Panasonic, which supplies the batteries for Tesla’s electric cars, is “aiming to achieve zero usage in the near future and development is under way”, according to Kenji Tamura, who is in charge of the Japanese firm’s automotive battery business.

The two companies are leading an industry race to reduce exposure to the metal even before the electric vehicle (EV)revolution truly builds momentum.
It’s not difficult to see why.

The London Metal Exchange price of the battery input has already rocketed from under $30,000 per tonne at the end of 2016 to a current $86,750.
It could go even higher.

Cobalt supply is dominated by Democratic Republic of Congo, presenting a volatile cocktail of political, operational and ethical risk.

And cobalt from Congo is dominated by China, which has locked down supply chains to secure its own fast-growing battery sector.

For relative newcomers, which means much of the European automotive sector, cobalt is the most problematic of all the ingredients in the metallic alchemy of an EV battery pack.

But given cobalt is one of the single most important determinants of a battery’s stability and performance, can the problem be engineered away?
Graphic on LME cobalt price:

Tesla and Panasonic are leading the EV field when it comes to minimising cobalt usage.
That’s primarily because from inception they took a different chemical road to build batteries with the capacity and stability to power an electric vehicle.

Panasonic’s nickel-cobalt-aluminium (NCA) technology has always used less cobalt than the nickel-cobalt-manganese (NCM) formula used by just about everyone else.

And the company has had 10 years experience since the 2008 launch of the original Tesla Roadster to work on its battery chemistry. ...MUCH MORE
*...China Molybdenum Co. bought a stake in one of Congo’s biggest copper and cobalt mine, Tenke Fungurume, as part of a $3.8 billion deal last year, and Freeport-McMoRan has left the country. China’s Zhejiang Huayou Cobalt Co. is developing a copper mine near Kolwezi in the country’s southeast. In March, Glencore agreed to sell about a third of its cobalt output to GEM Co., a Chinese supplier of battery chemicals....
Bloomberg, June 12, 2018
June 12, 2018 
Batteries: VALE Sells Forward $690 Million of Cobalt Production as the Market Rolls Over (VALE; KBLT)

May 4, 2018
"BNEF Brief: Elon Musk's Warning on Cobalt Use"

May 2016
Why the CIA Reads The Financial Times (and you should too) Tesla and Cobalt
A couple weeks ago we posted a seemingly innocuous piece with a boring headline: "'Freeport Sinks On Sale of Africa Copper Mine To Chinese' (FCX; LUN.TO)".
I figured there were at best two thousand people in the whole world who knew or cared about the back story and real import of what was going on so I'd just drop it as an Easter egg for the cognoscenti and other assorted electric vehicle/conflict mineral/African warlord/Elon Musk/extractive industry/Génocidaire hunter/U.S. political corruption watchers to find.
Well now that cat's out of the bag.
Big kudos to the FT's Henry Sanderson for recognizing one hell of a story and a small request for the Financial Times: Can you tell us what the old ENRC is up to these days?
From The Financial Times, May 25:
China plays long game on cobalt and electric batteries...
May 2016
"Freeport Sinks On Sale of Africa Copper Mine To Chinese" (FCX; LUN.TO)

Sept. 2016
DR Congo’s State Mining Company Submitted An Offer to Buy Freeport McMoRan's Stake In Tenke Fungurume Copper, Cobalt Mine (FCX;

Sept. 2016 
Lundin Mining Granted Second Extension To Bid For Giant DR Congo Cobalt/Copper Mine
So waddya think?
Is Tesla going to stick with current battery technology and use cobalt or will one of the competing approaches prove so superior that the value of Tenke Fungurume falls 60%.

Follow one road and all Europe may be free and the life of the world may move forward into broad, sunlit uplands. But if we fail, then the whole world, including the United States, including all that we have known and cared for, will sink into the abyss of a new Dark Age made more sinister, and perhaps more protracted, by the lights of perverted science.

No pressure.
And no idea why Churchill is showing up in the intro to a mining story.

It may be as simple as always thinking it would be nice to walk into the Monday morning meeting and, just once, have someone acknowledge last week's performance with "This was their finest hour".
Just once....