Monday, February 27, 2017

"Electric-car makers on battery alert as hedge funds stockpile cobalt"

Following up on last May's "Why the CIA Reads The Financial Times (and you should too) Tesla and Cobalt".
From the Financial Times via the Irish Times, Feb. 23:

Speculators swell appetite for metal as price of scarce material up by 50% 
Suppliers to Tesla and other electric-car makers are scrambling to secure shipments of the key battery material cobalt after a group of hedge funds amassed a large stockpile of the scarce metal.

In a bold wager on higher prices, half a dozen funds, including Switzerland-based Pala Investments and China’s Shanghai Chaos, have purchased and stored an estimated 6,000 tonnes of cobalt, worth as much as $280 million, according to the investors, traders and analysts.

The stockpile is equivalent to 17 per cent of last year’s production of the metal. Increasing use of batteries with chemical forms of the metal by Chinese electric-car makers, alongside ambitious plans by the likes of Elon Musk’s Tesla, have created a fertile backdrop for speculators hoping to profit from swelling appetite for cobalt, which boosts lithium-ion batteries’ power.

They are betting that demand for electric vehicles will exceed market expectations and push the up the price as battery makers such as Panasonic, which makes battery cells for Tesla, rush to lock-up supplies of the material. 

Global demand
Global demand is already expected to outstrip supply this year by 900 tonnes, according to commodity consultancy CRU. It estimates demand will grow 20 per cent a year for the next five years, thanks to buying from the electric car industry whose production grew by 41 per cent last year and which accounts for half of annual consumption. 

The price of cobalt, mined almost exclusively in the Democratic Republic of Congo, is already up by more than 50 per cent since November to $21 a metric pound. Prices rose to a peak of about $50 a pound in 2007, before dropping to a low of $10 in 2015....MORE
We have a silly habit of dropping breadcrumbs as we journey along the way, here's the intro to that 2016 piece:
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/GĂ©nocidaire 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.... 
Apropos of nothing in particular, from the FT, Feb. 26: