Congo is to Electric Vehicles what Saudi Arabia is to Internal Combustion Engine

First, Volvo announced it would begin to phase out the production of cars that run solely on gasoline or diesel by 2019 by only releasing new models that are electric or plug-in hybrids. Then, France and the U.K. declared they would ban sales of gas and diesel-powered cars by 2040. Underscoring this trend is data from Norway, as electric models amounted to 42 percent of Norwegian new car sales in June, 2017.

China already leads globally in EV sales. Sales of new-energy vehicles, or NEVs (EVs, plug-in hybrids, and fuel-cell vehicles), may top 700,000 units in 2017 and 1 million in 2018. Almost all those cars are Chinese brands. The government has set a target of 7 million vehicles by 2025. To reach that goal, it’s doling out subsidies and tightening regulations around fossil-fuel cars.

What does this mean to the Democratic Republic of Congo?

Electronic vehicles and electronic devices store electricity in batteries. Cobalt’s efficiency in conducting electricity has made it essential for rechargeable Lithium-ion batteries used in electric vehicles; and due to the growing popularity of electric vehicles and a near-insatiable demand for rechargeable batteries, there is a huge growth in demand for rechargeable Lithium-ion batteries.

Presently the battery industry uses 42 % of global cobalt production, a critical metal for Lithium-ion cells. The remaining 58 % is used in diverse industrial and military applications (super alloys, catalysts, magnets, pigments…) that rely exclusively on the material.About 1,300 metric tons of cobalt were used in electric vehicles in 2014, Morgan Stanley estimates. The total is expected to rise to 11,320 tons this year and 62,940 tons by 2025.

Approximately 97 % of the world’s supply of cobalt comes as a by-product of nickel or copper (mostly out of Africa) and Congo produces more than half of the global supply. According U.S. Geological Survey (cobalt production); Benchmark Mineral Intelligence (cobalt sulphate, production forecast), Congo alone accounts for 54 % of global production of raw cobalt, which according to Statista was 66,000 metric tons in 2016 and 64,000 metric tons in 2017.

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The market value went up to more than $8 billion and London Market Exchange price went above $75,000 in December 2017.

Presently, there is a world-wide race to lock up the supply chain for cobalt, which will likely be in even greater demand as electric-car production rises. So far, China is way ahead and China is by far the biggest consumer of cobalt from Congo. Chinese refiners import about 94% of their cobalt from the African nation, according to Darton Commodities.

Few commodities have had more dramatic increases in demand than cobalt, despite it being a by-product of copper and nickel mining. Global cobalt production has quadrupled since 2000 to about 123,000 metric tons a year, according to the U.S. Geological Survey.

Demand is growing even faster and is expected to reach more than 200,000 tons by 2025, according to researcher Wood Mackenzie. Such expectations have caused cobalt prices to more than double in the past year in London trading. Cobalt prices are up more than 230% since the end of 2015, according to Thomson Reuters.

As reported by Bloomberg, some companies and battery experts say technological shifts to make rechargeable batteries with less cobalt—or none at all—could make cobalt less important in battery production, but China is lining up behind nickel manganese cobalt batteries. They have a higher energy density than batteries without cobalt, giving cars greater driving range while taking up less space.

Global battery manufacturing capacity is about 110 gigawatt hours a year, mostly for consumer electronics, electric vehicles and electricity storage. In the past year, China has announced plans to add more than 150 gigawatt hours of production in the next three to four years, tripling current capacity.

“The Chinese manufacturers have targets set by the government,” says Luis Munuera, an analyst with the International Energy Agency. “It is not a market response. It is the amount of battery capacity the government wants to have.”

Most Chinese battery production is now focused on low-end, low-density batteries, and many battery makers are relatively small. But the Chinese government has made offers of support contingent on the energy density of the battery. That means more nickel manganese cobalt batteries.

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