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What’s Happening with EV’s - Specifically Cobalt?
A Spotlight Special Feature: Timothy Strong - Project Development Manager - Global Energy Metals Corporation
I have held an interest in the electric vehicle (‘EV’) sector and the battery metal space long before joining the team at Global Energy Metals Corp. (TSXV: GEMC | OTCQB:GBLEF) earlier this year. However, since joining this ambitious, industry minded team that have been focused on the battery metals sector for over a decade, I have found myself more engaged in the EV supply chain, its dynamics and the reliance of it on the raw materials we are currently exploring for.
Last week I had the pleasure to sit in on an industry talk (read Zoom webinar) on the EV supply chain and how it has been affected by COVID-19 in Q1 and Q2. The talk, hosted by the experts at Benchmark Minerals Intelligence, focused on all aspects of the EV supply chain from raw material supply, lithium-ion battery production and general EV demand.
They forecast that by 2030, there will be demand for 34,000,000 EV’s, around 1,978GWh of battery power and that there will actually be a capacity of 43,000,000 EVs, or around 2,397GWh. This clearly has the appearance of oversupply in the market; however, industry experts also estimate the cobalt supply to be around 228,000 tonnes by 2030. To put that into perspective, that is only enough for 17,900,000 EV’s, the same rings true for the other battery metals.
Currently there is a 7% decrease in cobalt output, mostly due to Glencore PLC (LSE:GLEN), the multinational commodity trading and mining giant, shutting down operations at Katanga in the Democratic Republic of Congo (“DRC”); Glencore currently accounts for almost 26% (32% if you include subsidiaries) of the current production supply of cobalt. The continued issues in the DRC is likely to delay expansion in the cobalt production sector for at least 6-12 months, thus this cobalt output will probably decrease further. This is occurring at a time when China, who represent 73% of lithium-ion battery production capacity, is ramping up again as the spread of COVID-19 weakens in that country.
Compared to China, Europe has a 6% share and the USA 10% of lithium-ion battery production capacity. This is forecasted to grow to 16% in Europe and drop to 9% in the USA while China retains its dominance at 70%. What does this tell us in terms of supply of raw materials? To me, it shows we should be looking for these raw materials closer to home, Europe and the USA to be precise. Currently neither the USA or any European country accounts for production or reserves of cobalt in the top 10 of the world. Glencore is the only European company to make the top 10 producer list.
Various cobalt exploration companies are looking on both continents. In Europe European Cobalt (ASX:EUC) are searching in Slovakia and Finland. Mawson Resources (TSX:MAW), despite a new project acquisition in Australia, are searching for cobalt in Finland. First Cobalt (TSX:FCC) has just picked up further land packages in the infamous Idaho Cobalt Belt and are developing the Iron Creek project. And of course, we at Global Energy Metals (TSXV:GEMC) are exploring for nickel, copper and cobalt at the Lovelock and Treasure Box projects in Nevada in parallel to our exploration and development efforts at our Millennium Project and Australian cobalt-copper-gold portfolio in Mount Isa, Queensland and past producing Werner Lake Cobalt project in Ontario, Canada.
Many countries now consider cobalt, and the other battery metals, as ‘critical’ and their exploration and exploitation is being encouraged. This is especially true for the USA, Europe and Australia. And while the projects held by the juniors mentioned above are progressing well, they are still not at production decision and will require much needed financial and government support to enter the critical mineral supply chain from a non-DRC and China perspective.
As the coronavirus pandemic has highlighted, there is an apparent “decoupling” of the U.S. and Chinese economies causing disrupts in supply chains and further strains on relations between the two countries. It has also made “localization” a key theme moving forward, especially as it relates to the raw materials, like cobalt, that are considered vital to national and economic security.
In fact, there have been a number of critical minerals collaborations announced in an effort to reduce these nation’s susceptibility to critical mineral supply disruptions. It highlights that these end-use regions share a joint interest in improving critical mineral security and ensuring the future competitiveness of domestic minerals industries. This international cooperation is anticipated to result in greater support for the development of critical mineral projects, such as Millennium, and the establishment of a strong diversified mine-to-market supply chain to serve the eMobility, aerospace, defense and lithium-ion battery industries.
Tim Strong is a principle geologist and MD of Kangari Consulting as well as the Project Development Manager at Global Energy Metals (TSXv: GEMC). His experience spans the management and implementation of gold and base metal exploration, both for junior and major companies.
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