The Great & the Good of the London commodities trading community came together in the last week of February to mull upon the prospects of specialty metals, in particular the battery metals. Braving the snow (nothing by New York or Toronto standards) they attempted to fathom fact from fiction as it pertained to metals where the sound and the fury exceed the reality by a long way, particularly when it comes to Cobalt.
The chief takeaway was that EV’s will soar in popularity and adoption BUT Cobalt will not be able to deliver therefore, most probably, Manganese will step up to the plate and be the metal of choice to replace it in Lithium-Ion battery combinations. Our thesis is that the Cobalt crunch is upon us and that various industry majors are whistling past the graveyard hoping that no-one notices that they don’t have enough of the “stuff” and have even less chance of securing the product despite potentially throwing substantial amounts of money at the price. The problem is that these companies (Tesla being one) are not putting, and have not put, their money where their mouth is in backing projects.
To a degree we have sympathy with them not having backed any of the Cobalt chancers that are doing the rounds, but neither have they thrown any money at the Lithium developers to ensure they get a supply of that metal outside the Chinese orbit.
Key takeaways were:
- Cobalt crisis is looming without any solution and that few, if any, are prepared for it
- Cobalt can be replaced with other metals and combinations of Lithium with Manganese look like the most likely winners going forward
- Governments are not geared up for the EV boom. It has revenue implications(lower tax take on fossil fuels), infrastructure implications (lack of charging stations and need for probably 25% more electricity) and there is the Cobalt consideration (a metal most politicians do not know has supply issues)
- Rare Earth supply implications are being ignored in the rush towards battery metals
- Lithium is NOT in any sort of supply crisis. There will be abundant supply
- Fluorspar (used in electrolytes in Li-Ion batteries) is in a difficult supply situation. This is compounded by China controlling 66% of the current production
- Mass storage devices will NOT be Lithium-Ion based and Vanadium Redox batteries look to have a strong potential for larger applications
Three “mining” companies presented. These were a pre-listing Canadian entity pursuing manganese through tailings recycling in the Czech Republic, Bushveld Minerals (the AIM-listed producer of Vanadium in South Africa) and Bacanora Minerals (in which light mention was made of the basalt cap that overlays the deposit) .
It was interesting to hear a group of insiders in the trading and battery production markets speaking of the dynamics rather than mining wannabes. This group know how difficult it is to source product currently and when that supply constriction runs into a demand curve that hyperbolic then something has to give… and what has to give is industry’s use of Cobalt in applications.