Huge concerns over supply of cobalt and vanadium

Date: Jan 2, 2019

Growth in the electric vehicle and renewable energy industries in North America not only depends on increasing demand for these technologies but also on securing a stable supply of battery metals like cobalt and vanadium. Supply for both of these metals happens to be largely influenced by market forces outside of North America.

The majority of the world’s global cobalt production comes from the conflict-ridden Democratic Republic of Congo (DRC), which is also home to the world’s largest-known cobalt reserves. The DRC’s chronic corruption and constant political conflicts alongside the government’s recent tax hikes for mining companies and cobalt giant Glencore’s (LSE:GLEN) production setbacks, presents significant supply-side risks for the EV battery industry.

In addition, China — which controls 85 percent of the world’s cobalt refining capacity — sources over 90 percent of its cobalt supply from the DRC, further exposing the global battery market to serious supply disruptions. The country also has the most EVs on the road than any other nation, including the United States. China’s government is pedal-to-the-metal when it comes to replacing fossil-fuel vehicles with electric in an effort to dramatically reduce its air pollution problems. According to a McKinsey report, the Asian nation is home to 43 percent of global EV production and nearly 50 percent of the world’s planned capacity for lithium-ion battery production.

To supply its burgeoning EV industry, China has been stockpiling cobalt as well as securing off-take agreements with cobalt miners. “China is going green and they are going to be the Silicon Valley of electric vehicles. To do that they want to secure the raw materials that ultimately comprise that enterprise,” saidAnthony Milewski, Chairman and CEO of Cobalt 27 Capital Corp.

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