[LME Week] Cobalt supply will greatly increase in the future. It is a trend for electric vehicle batteries to increase nickel and reduce cobalt.

On October 10, LME held a symposium on electric vehicles in London to discuss the current situation, prospects, opportunities and challenges of the electric vehicle market.

Fastmarkets MB Coblt / William adams

The theme of the speech:

Development Prospect of Cobalt Metal in Electric vehicle Market

William Adams says the cobalt market will be oversupplied in the future, but will eventually be absorbed by downstream or consumers.

In 2017, 14% of cobalt was on the battery market, while other cobalt metals flowed into energy, emerging markets and other places. It is clear that this figure will rise significantly over the next few years, setting a 40 per cent release rate. This, of course, is inextricably linked to the rise of the electric car market. The world is accepting the arrival of the era of electric vehicles, and the Chinese market is growing particularly rapidly, especially between 2017 and 2018, when sales of electric vehicles have been growing dramatically. The Chinese government is also constantly implementing environmental protection and other policies to vigorously support the development of electric vehicles.

In the future, a major trend is that the government, automobile manufacturers and consumers all hope to continuously promote the endurance of electric vehicles, which requires adequate energy storage, so the development of large-scale infrastructure projects such as the power grid will become better and better. This and the development of the electric vehicle market complement each other.

And it is certain that more models will be introduced in the electric car market in the future to attract consumers to increase their consumption in the electric vehicle market, which will also help offset the high cost of producing electric vehicles at present.

With regard to the tedious charging of electric vehicles, which is currently being talked about in the market, Adams explained that with the continuous development of battery technology for electric vehicles, the power storage capacity will certainly be fully improved. I believe that in the near future, assuming that an electric car has a distance of 300 miles, then, on average, the owner will need to charge three to four times a month, which is even easier than the use of a conventional fuel car.

As for the battery chemicals sector, Adams said that the first generation of batteries on the market mainly use cobalt and lithium, which is a lot of good factors for the development of cobalt as a metal alone, but in the future, The proportion of cobalt metal in the battery will show a gradual downward trend.

He also said that the capacity of electric car batteries will gradually change from the current 2GWH to the large capacity of 4GWH. In the near future, the supply of cobalt on the market will increase greatly, and now we have seen a rebound in cobalt production, and large mining companies such as Glencore are resuming production of cobalt metals. It is very likely that the supply of cobalt will exceed the demand in the future market. But in the longer term, the extra cobalt in the market will eventually be absorbed as inventory, prompting the market to achieve a balance between supply and demand. There is no need to worry too much about the cobalt glut in the market, as downstream companies are bound to maintain a certain amount of inventory to deal with emergencies, such as when customers need to replace batteries. Market concerns about supply clearly do not take this into account.

Finally, Adams also stressed that a large number of waste cobalt will pour into the market in the future. At present, China is doing a very good job in recycling waste cobalt, and Asia will also have a leading global trend in the future.

Panel discussion

Moderator: London Gold Exchange Clearing Organization / Adrian Farnham

Guest: Pala Investment / Jessica Fung

Cadence / Kiran Morzaria

Bloomberg NEF / James Frith

Eurasian Resources / Michael Insulan

Summary of views

In theory, governments have been talking about a complete ban on the use of fuel-fueled cars on the market, and most carmakers are willing to switch to electric cars. But the change will take time, even longer than the market currently imagines. What we need most now is that the quantity and quality of the mines should be improved. Asia, Europe and the United States also need more electric vehicle-related metal production and smelting plants. Infrastructure construction, including the power grid, needs to be improved.

But on the whole, the trend of the whole market is very optimistic, but these changes will take time and will not be achieved overnight, and we should not be blindly optimistic. Although governments have promulgated corresponding subsidy policies to improve the development of the electric vehicle market, but this is not a simple thing after all. Another 30 million electric vehicles are likely to flow into the market by 2030, and the future is still bright.

At present, the demand for cobalt on the market is still growing very fast. Large-scale projects have also been put into production in Africa, such as the Democratic Republic of the Congo and Rwanda. Cobalt metal overcapacity will be a problem that the market will have to face in the future, but from the perspective of industrial development cycle, producers and downstream enterprises may strengthen inventory to deal with the situation of oversupply.

In the future, the price of cobalt metal will not change much, and there may be a certain rebound trend.

When it comes to cobalt mining, this has also been a widely discussed moral issue in the market. More and more consumers in the market have asked enterprises and miners to carry out "responsible mining". Although there are still some problems of child labour and artisanal mining of minerals in Africa, it is believed that they will gradually improve in the future. Most of the cobalt mining is in line with OECD regulations, but because the current downstream enterprises are generally difficult to trace back to the cobalt metal mining process, thus creating a misunderstanding to the market, there are doubts about the sustainable development of cobalt metals.

Lithium

Judging from the current exploration situation, there are still plenty of lithium deposits in the world. However, the mining of many lithium mines is also limited by government regulations to some extent, and some technical bottlenecks have brought some shackles to the increment of lithium. At present, although the development of some large cobalt and lithium mining projects around the world has been signed, more capital injection is still needed, and the road to project financing is also full of thorns.

Lithium is not a new metal material, but it is a younger commodity. Unlike copper, lithium has a short trading history and it is difficult to predict where its prices will go. At present, major investment banks and institutions can make more indexes for lithium as a commodity in the market. The market is also in great need of a price index based on the most traded lithium products to better study lithium as a commodity for the market. But it is also a challenge that the development of the lithium price index needs to be based on a large database to ensure that the market is not misled.

Nickel

In the future, the increase of nickel and decrease of cobalt in electric vehicle batteries may be the mainstream trend, because if there is more nickel and less cobalt in the battery, then the price and cost of the battery will decline. After all, the price of cobalt is still relatively high. And the battery with a large amount of nickel has a significantly better battery life.

At present, China is vigorously promoting the 811 type of battery, which uses a relatively large amount of nickel. China also hopes to lead the global battery revolution in the future, and the Chinese electric vehicle battery market is also very active at present.

But it is hard to say who will laugh last in the future battery market, depending on which metal is the best for battery development.

Capital construction

For infrastructure construction, the next five to 10 years need to be well planned. The revolution of electric vehicles will completely change the way people travel, and traditional infrastructure projects such as gas stations may be phased out, but large infrastructure projects such as the power grid still need to be permanently developed.

For the charging of electric vehicles, in addition to strengthening the construction of the power grid, intelligent charging is also very important, such as allowing the users of electric vehicles to carry out off-peak charging, avoiding the peak period of electricity and other measures are very practical and effective.

Foreign mines determine the supply of the metal market, but China controls nearly half of the global demand, so there has always been a saying that global metal demand depends on China. Although there are many big players on LME Week, the research and forecast of metal demand side and supply-demand balance in China still need to look at the views of many authorities at SMM annual meeting and the exclusive research information and data of SMM.

What will be the balance between supply and demand in the metal market next year, and how will the price go? Where is the demand growth point? What is the impact of environmental protection? What is the evolution of industry policy? Please pay attention to the "2018 China Nonferrous Metals Annual meeting and 2019 (SMM) Metal Price Forecast Conference" held in Shanghai on October 19, at which there will be famous macroeconomists, executives of well-known enterprises in various industries, and senior analysts of various metal varieties in SMM. For you a comprehensive analysis of the 2019 metal market.

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