Belgium's Umicore has secured a €125mn ($141mn) loan from the European Investment Bank (EIB) as European countries increase their support for electric vehicles (EVs) at a time when base metals prices are under sustained pressure.
Umicore now has €1.2bn of immediate cash available, as well as a further €300mn made up of the EIB loan and extra undrawn facilities from "core relationship banks", it said. Given current market conditions, this puts Umicore in a strong buying position for vital assets in the battery materials revolution.
Prices for copper, nickel and cobalt have fallen by 20pc, 16pc and 64pc, respectively, since the highs of June 2018. LME three-month copper prices are now at $5,801/t, up from $4,618/t at the depths of the recent crisis on 19 March, but still low compared with $7,223/t on 11 June 2018.
Nickel — now at $12,881/t on an LME three-month basis — is still sought in increasing quantities by Umicore and its global peers, while supply of cobalt — at $29,500/t on an LME three-month basis — remains centralised around operations in the Democratic Republic of Congo.
Argus-assessed regional premiums follow a similar pattern, with prices for cobalt hydroxide cif China having fallen by 11pc to $10/lb since early October 2019, while cif China lithium carbonate prices of $7.75/kg are at their lowest since early June 2018.
The supply challenges for these metals will require technology and recycling companies to secure longer-term supply arrangements to allow their technologies to become more widely adopted.
Umicore's additional liquidity will also remain important when dealing with Covid-19 issues and a gradual restart to operations. Original equipment manufacturers are "gradually" resuming production at assembly lines, "albeit later than anticipated", Umicore said, and the company is now working to restart its catalyst production, which market participants expect to directly galvanise consumer demand for many minor and battery-related metals over the near term.
Umicore expects demand for its products to remain stable, even as its consumers look likely to become increasingly regionalised now that international trade has been buffeted by cyclical factors such as Covid-19, and, more importantly, by structural factors such as the western world's deteriorating trade relations with China. Umicore's latest move suggests that European companies are set to expand more meaningfully into the mass production of battery technologies, and now with more tangible EIB support.
