SMM: automakers, battery makers and technology companies have been scrambling for long-term supplies of cobalt over the past year, which have been at risk of shortage as a result of the revolution in new energy vehicles, according to Bloomberg.
Under the agreement, Wheaton and Cobalt 27 will pay $390 million and $300m, respectively. A forecasting company predicts that once the project is fully operational in 2025, it will increase production by 850 tons per year, and Cobalt 27 will receive about 730 metric tons of minerals per year starting in 2021. at the same time, It will also continue to pay Vale about 20 per cent of spot cobalt prices.
After Glencore signed a three-year long-term contract with Chinese battery suppliers in March, Vale's model is likely to be less likely to be replicated directly by other major miners. Glencore and Eurasian Resources, which have ambitious production expansion plans, use cobalt production and sales as their main source of revenue, so they are unlikely to limit their prices for cobalt as Vale does.
Caspar Rawles, an analyst at Benchmark Mineral Intelligence, said car companies that wanted to secure supplies of raw materials could lock in supplies of cobalt through a range of strategies, such as signing long-term contracts with upstream miners.
The passage of the Vale agreement, which sets a price benchmark, shows that financial investors are willing to pay for long-term cobalt trading. Rawles predicts that the future of cobalt must still be high prices and a lack of supply.
(SMM compiled from Bloomberg News)
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