Higher cobalt prices lift Gem amid battery expansion

Higher cobalt prices lifted the profitability of Chinese private-sector battery material manufacturer Green Eco-Manufacture (Gem) in this year's first half, as it expands its battery business.

Gem posted a first-half profit of 411mn yuan ($60mn), 51pc higher from a year earlier from increased revenues from its battery business and cobalt, nickel and tungsten operations, up by 98pc to Yn4bn and 55pc to Yn1.53bn respectively.

Gem in March this year signed a three-year cobalt offtake agreement with Switzerland-based mining and trading company Glencore, tying up increasingly tight supplies of cobalt for use as feedstock in its production of ternary battery materials.

Gem recycles around 3mn t/yr of waste resources, with its annual recycling amount of waste compact batteries accounting for more than 10pc of China's total. Its annual recovery of cobalt resources equals that of China's cobalt mining output. Its recycling and remanufacturing of cathode materials for lithium-ion batteries accounts for more than 20pc of the Chinese market.

Cobalt metal prices started to move up from May last year to April 2018 amid increasing demand from the power battery industry. The average price of 99.8pc grade metal was Yn606.62/kg during January-June this year, up by 66pc than the average price of Yn364.94/kg for the first half of 2017.

But cobalt prices started to fall from April this year as the government's subsidy policies for electric vehicles tightened and weighed on demand. The use of cobalt in 8-1-1 and 6-2-2 nickel-cobalt-manganese (NCM) batteries has fallen compared with 5-2-3 NCM materials. Argus last assessed the 99.8pc grade metal unchanged at Yn465-495/kg on 6 September, its lowest level since the end of November 2017.

China's January-July production of pure electric and plug-in hybrid vehicles increased by 71pc to 382,000 and by 148.9pc to 122,000 respectively.