Business World

Wednesday 21 August 2019

Cobalt control: China's secret weapon in the race to dominate electric car industry

THE BIG PICTURE

Jack Farchy and Hayley Warren

OVER the past two years, cobalt has emerged as one of the hottest commodities of the electric-vehicle revolution. The metal, an important component in lithium-ion batteries, has more than doubled in price, making carmakers and tech giants fret about securing future needs.

The focus on the metal has turned a spotlight on the obscure supply chain that takes cobalt mined in the Democratic Republic of Congo, Canada or Morocco, and ultimately delivers cobalt-containing batteries to companies from Samsung to Volkswagen. That supply chain is dominated by Chinese companies.

While there's little cobalt mining in China, Chinese companies have snapped up cobalt mines abroad in recent years, particularly in the Democratic Republic of Congo, the largest source of the metal.

One key concern for buyers is that over half of the world's supply originates from a country where there has never been a peaceful transition of power.

Eight of the 14 largest cobalt miners in Congo are now Chinese-owned, accounting for almost half of the country's output.

After the cobalt has been mined, it is sold - sometimes via traders - to refiners. They produce cobalt metal and powder, which are mostly used to make super-alloys used in jet engines, or chemicals like cobalt sulphate, which are used to make batteries.

China is even more dominant in the production of cobalt chemicals needed to make batteries than Congo is in cobalt mining. According to data from Darton Commodities, China accounts for more than 80pc of the production of cobalt chemicals.

In the next stage of processing, the cobalt chemicals are put together with other metals, such as manganese or aluminium, to make cathodes - the positively charged part of a battery.

There's a wide range of different chemical make-ups of lithium-ion batteries. Not all use cobalt, but many of the most popular do. Following the surge in cobalt prices, most battery-makers are researching ways to reduce the proportion of cobalt in their batteries.

Currently in the ascendancy in the electric-vehicle industry are nickel-manganese-cobalt oxide batteries, used in most electric cars, and 57pc of the production capacity for this type of cathode is in China.

Tesla, however, uses nickel-cobalt-aluminium oxide batteries, which have a lower proportion of cobalt. Cathodes of this type are largely made in Japan. The consumer electronics industry largely uses lithium-cobalt-oxide batteries, which contain the highest proportion of cobalt.

Finally, the cathodes are brought together with the other components of a battery to make battery cells and then whole batteries in so-called "megafactories". After Tesla pioneered the concept of a gigafactory in Nevada, there are now dozens of similar plants springing up across China.

Bloomberg

Irish Independent

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