Review of Cobalt and Lithium Resources Competition throughout 2021 – A Total Amount of Over 40 Billion Yuan Involved

SHANGHAI, Dec 30 (SMM) - Cobalt and lithium were undoubtedly the topic of the year which featured recovery and growth. As the shortage of upstream minerals drove up the prices of cobalt and lithium salt, many midstream and downstream enterprises have embarked on the road of competing with upstream miners for cobalt and lithium resources in order to control their costs.

The most dramatic acquisition case

Among market participants active deployment in the resources sector, there is nothing more dramatic and reversed than the battle for the acquisition of Millennium Lithium. The battle involved Ganfeng Lithium, one of the lithium giants, and CATL, the power battery giant whose share prices have set new record highs this year. The battle began with CATL’s interception of the deal and temporarily preserved the acquisition rights of Millennium Lithium. But then Millennium Lithium received a "better offer" from Lithium Americas that was higher than CATL' bid, and eventually Lithium Americas acquired all of Millennial's shares for a total consideration of approximately US$400 million. The “turf war” over Millennium Lithium, which lasted for nearly four months, finally came to an end.

According to official media statistics, the capitals involved has exceeded 40 billion yuan as companies scramble for lithium resources such as lithium mines and salt lakes! The chart below may offer a glimpse of the heated competition in the past year.

It is that domestic and foreign companies have been actively engaged in the acquiring of cobalt and lithium resources, mostly in the second half of this year. With this in mind, it is important to mention the "big event" that occurred twice in 2021 when Australia's major lithium mine, Pilbara, auctioned spodumene concentrate at an all-time high.

Two spodumene concentrate auctions at Australia's leading lithium mine - Pilbara

Pilbara's first public auction of spodumene concentrate took place at the end of July, and achieved a record high bid of US$1,250/mt FOB and US$1,315/mt plus ocean freight of US$65/mt (CIF China), boosting market sentiment.

In mid-September, Pilbara opened its second public auction for spodumene concentrate, with the final prices at US$2,240/mt, well above the estimate of US$1,700-2,000/mt (CIF China).

The prices of lithium and cobalt kept hitting new highs

According to SMM spot prices, the YTD (as of December 29) lithium metal prices rose by 740,000 yuan/mt or 152.58% to 1,225,000 yuan/mt; and the average spot price of spodumene concentrate rose US$1,682.5/mt or 403% in the same period; battery-grade lithium carbonate prices added 217,000 yuan/mt or 409.43% to 270,000 yuan/mt; battery-grade lithium hydroxide prices rose 169,500 yuan/mt or 342.42% to 219,000 yuan/mt, all setting three-year highs.

In terms of cobalt, although its performance was not as strong as that of lithium, it still could not be ignored. The average spot price of refined cobalt rose by 213,000 yuan/mt to 487,000 yuan/mt compared with the beginning of the year, an increase of 77.74%. As for cobalt salts, the average spot price of cobalt sulphate rose by 44,500 yuan/m or 77.39%, compared with the beginning of the year.