Rise of e-cars like Tesla will inevitably lift prices for tech metals like cobalt
Cars like Tesla's “Model X” are unthinkable without lithium-ion batteries, and so are almost all of our battery-powered electronic devices. However, these batteries do not only contain lithium as the
cathode material. Market insiders are now emphasizing that investors should monitor these other
metals, rather than lithium.
Tesla’s batteries contain lithium, nickel, cobalt and aluminum as the cathode material. Nearly 10% of the 544kg battery pack in each car is cobalt, that is 50 kg per vehicle.
According to the U.S. Minerals Survey, global cobalt production in 2014 was 112,000 tonnes, with exactly 50% or 56,000 tons coming from the Democratic Republic of Congo - one of the most crisis-hurt regions on Earth.
On top of general supply worries, all major companies are
thus confronted with ethical considerations and the Dodd-Frank Act, says Bodo Albrecht of Kitco News.
The U.S. is not even listed in the report as a contributor to global
supplies but is said to keep total reserves of just 37,000 tonnes.
Tesla and Panasonic, the carmaker's technology provider, will not be able to domestically procure the cobalt necessary at the new “Gigafactory” as they had hoped.
William Hattan, an investment broker specializing in technology metal investments, cautions: “More than 40% of the world’s cobalt production already go into the battery market. The rest goes into super alloys used in the aircraft and space industry, all of which are seeing strong growth”.
Cobalt prices were keeping around $13 a pound for a long time but prices now began to move. Glencore announced an 18 month suspension of its operation in Congo. China’s State Reserve Bureau recently said it purchased 400 tonnes at $ 32,931 per ton, nearly $15 a pound, leading to elevating prices in general.
Hattan concludes that with demand rising and supplies trimmed mid-term, "I see the market undersupplied by at least 6,000t next year". First Hafnium, now Cobalt – technology metals seem set for a rebound.
