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Africa's cobalt to benefit from EV boom

05 Feb 2018 17:50 GMT
Africa's cobalt to benefit from EV boom

Cape Town, 5 February (Argus) — Africa's dominant position in the global supply of cobalt will make it a critical factor in the ongoing development of lithium-ion batteries for electric vehicles and energy storage.

While lithium projects are being developed on the continent, these are relatively insignificant when compared with hard rock and brine lithium projects in South America and Australia, delegates at the Investing in African Mining Indaba in Cape Town were told today.

Around 65pc of the world's cobalt supply comes from the Democratic Republic of Congo (DRC). This is expected to rise to 70pc over the next five years as more projects come on stream, Tony Southgate of Eurasian Resources Group said.

Eurasian has cobalt and copper projects in the DRC and neighbouring Zambia and is developing a new cobalt processing facility in Kolwezi, in the south of DRC. Small amounts of cobalt are produced in Zambia and South Africa and some exploration is taking place in Namibia.

"Cobalt is the most relevant to Africa in the battery metals environment, followed by copper. We could have sold our output at Kolwezi three times over. That's how strong the interest is from battery makers and automotive companies," he said.

Cobalt is a by-product of copper output in the DRC with 1t of cobalt being produced in association with 10-12t of copper. Electric vehicles are expected to have 27pc more copper in them than internal combustion engine vehicles, Southgate said.

Outside of the DRC, cobalt is usually a by-product of nickel with 1t of cobalt being produced in association with 30-40t of nickel.

"It is difficult to overstate how critical cobalt is in the electric vehicle and energy storage market and how critical cobalt is to the global supply of cobalt," he said.

Between 20pc and 25pc of cobalt output in the DRC comes from artisanal mining. Ongoing steps are underway to certify that the cobalt supply chain is internationally acceptable.

While cobalt prices doubled over 2017 to a current price of $37/lb, panellists at the Mining Indaba expected it to rise to $47-$50/lb in the short to medium term.

"Electric vehicles and energy storage are at the beginning of a super cycle that is being driven by demand and changing behaviour. We are seeing significant structural change in the energy storage and automotive industries," Anthony Milewski, chairman of Cobalt27 Capital said.

Next generation electric vehicles can go further than 99pc of American commuters travel in a day. Drivers of electric vehicles can drive from one side of the US to the other and charge their vehicles along the way, he said.

"You may not see much evidence of electric vehicles or charging stations in Africa just yet, but they are increasingly present in China where I am based," Kobus van der Wath of Beijing Axis said.

A major factor in the underlying strength of cobalt prices and demand is that auto-makers need to be guaranteed of raw material supply for six or seven years when launching a new model.

"Battery makers are saying that they can make the batteries for electric vehicles, but they are also saying that they cannot be guaranteed of sufficient supply of cobalt and lithium to meet auto-makers' need," another panellist said.