Glencore, Umicore enter cobalt supply agreement

Switzerland-based commodities trading and producing company Glencore has entered into an agreement to supply cobalt hydroxide to Belgian battery materials producer Umicore.

The two companies have agreed a long-term revolving agreement for Glencore to supply cobalt hydroxide to Umicore from its cobalt mines in the Democratic Republic of Congo (DRC).

Cobalt hydroxide units will be sourced from Glencore's Kamoto Copper Company, owned by subsidiary Katanga Mining, and Mutanda Mining and sent to Umicore's refining facilities in Europe, including the Kokkola refinery in Finland. Glencore's output of cobalt in 2018 — refined and non-refined — was 42,200t and is expected to rise to 57,000t this year. The cobalt hydroxide will be processed into chemicals such as cobalt sulphate to supply the European battery industry.

Umicore has been out of the market for raw materials in recent months because of low demand for cobalt chemicals. Reduced growth in sales for the new generation of smartphones has reduced demand from the main consumer of cobalt chemicals, the smartphone industry. Prices for cobalt sulphate in China, the main consumer of the chemical, have fallen to Yn45,000-48,000/t ($6,512-6,946/t), from Yn138,000-145,000/t at the start of April 2018. The rollout of 5G technology is expected to renew smartphone demand in the next few years.

Demand from the car industry for cobalt battery chemicals is expected to increase as it transitions from fossil fuels to electric vehicles (EVs). Several European carmakers are due to launch flagship EV models in the next two years, including BMW, Fiat, Renault and Volkswagen.