LONDON/HANOI: Demand for lithium, cobalt, and nickel, which are essential for electric vehicle batteries, will rise as the globe tries to meet severe carbon emission targets, partly by phasing out internal-combustion-engine cars, raising the risk of shortages. Due to lower long-term contract pricing, high lithium prices have failed to encourage investment in additional capacity, whereas the problem with cobalt supply is that it is primarily a byproduct of copper, therefore investment decisions are focused on copper prices.
In the case of nickel, new projects in Indonesia, which possesses the world’s greatest reserves, suggest that major shortfalls may not occur until the end of this decade.
LITHIUMElectric vehicle batteries can contain either lithium carbonate or lithium hydroxide, although the industry usually refers to lithium carbonate equivalent (LCE), which includes both.
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On the spot market, LCE prices have risen beyond US$12,000 per tonne, more than doubling from November last year and reaching their highest level since January 2019, according to Benchmark Mineral Intelligence (BMI).
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These levels are sufficient to encourage investment in new capacity, but annual or longer-term contracts with lower rates signed in the fourth quarter of 2020 will be a barrier.
George Miller of BMI predicts a 25,000-tonne LCE shortage this year, with acute deficits beginning in 2022.
“These shortages will last until the end of the decade unless we see considerable and imminent investment into huge, commercially viable lithium resources,” Miller said.
Market balances for lithium carbonate equivalents, https://fingfx.thomsonreuters.com/gfx/ce/yzdvxmmanpx/Lithiumpercent20carbonatepercent20equivalentpercentagepercentagepercentagepercentagepercentagepercentagepercentagepercentagepercentagepercentagepercentagepercentagepercentagepercentagepercentagepercentagepercentagepercentagepercentageper 20percent20marketbalances PNG The fact that China houses more than 60% of processing capacity is a cause for concern, as it could jeopardize electric vehicle supply chains in the US and Europe. https://fingfx.thomsonreuters.com/gfx/ce/jbyprggmnve/Lithiumper cent20supplyper cent20Chinaper cent20vsper cent20restper cent20ofper cent20world/Lithiumper cent20supplyper cent20Chinaper cent20vsper cent20restper cent20ofper cent20world/Lithiumper cent20supplyper cent20Chinaper cent20supplyper cent20China PNG Lithium carbonate equivalent demand is expected to exceed two million tonnes by 2030, a more than 4.5-fold increase from 2020, according to Roskill’s analysts. COBALTThe amount of cobalt in batteries has been reduced in recent years, but rising EV sales indicate demand for the minor metal is anticipated to climb overall, resulting in shortages. Cobalt demand is expected to increase to 270,000 tonnes by 2030, up from 141,000 tonnes last year, according to Roskill analysts. Cobalt demand as a percentage of overall demand, https://fingfx.thomsonreuters.com/gfx/ce/xklvyawwkvg/Cobaltpercent20demandpercent20asper cent 20% of the total %%%%%%%%%%%%%%%%%%%%%% PNG Indonesia’s high-pressure acid leach (HPAL) plants will help to fill the gap. However, the fact that cobalt is primarily a byproduct remains a concern. “Because cobalt is a byproduct, it is difficult to invest in specialized capacity. There is no mechanism in place for supply to respond to demand and prices “George Heppel, a consultant at CRU, agreed. “By the mid-2020s, we’ll be in desperate need of another Katanga.” Glencore aims to produce 30,000 tonnes of cobalt this year from its Katanga mine in the Democratic Republic of Congo. Electric vehicle demand is expected to contribute for more than 120,000 tonnes, or nearly 45 percent, of total cobalt demand by 2025, up from roughly 39,000 tonnes, or 27 percent, in 2020, according to CRU. Cobalt demand by end use, https://fingfx.thomsonreuters.com/gfx/ce/xegvbrddnvq/Cobaltpercent20demandpercent20bypercent20demandpercent20demandpercent20demandpercent20demandpercent20demandpercent20demandpercent20demandpercent20demandpercent20demandpercent20demandpercent20demandpercent20demandpercent20demandpercent20demandpercent20demand Use a 20percent20endpercent20endpercent20endpercent20endper PNG The Democratic Republic of Congo, the world’s top cobalt producer, is working to improve controls and traceability of artisanal material so that it can be accepted by people concerned about human rights violations. https://fingfx.thomsonreuters.com/gfx/ce/bdwvkxxzxpm/Cobaltpercentage/Cobaltpercentage/Cobaltpercentage/Cobaltpercentage/Cobaltpercentage/Cobaltpercentage/Cobaltpercentage/Cobaltpercentage/Cobaltpercentage/Cobaltpercentage 2% of the population a supply of 20% a 20% increase 20country. PNG Concerns over nickel availability for battery chemicals were allayed when Tsingshan Holding Group, a Chinese nickel pig iron (NPI) company, announced that it will convert NPI into matte, which can be used to make battery chemicals. According to Macquarie analyst Jim Lennon, “there are now projects totaling 300,000 tonnes per annum to convert NPI into a product that can be processed into sulphate for batteries.” “It’s all hype that the nickel is on the cusp of a surpercycle. Until at least the mid-2020s, it will be oversupplied.” For much of this decade, Lennon anticipates Indonesia’s high-pressure acid leach (HPAL) plants to generate between 400,000 and 600,000 tonnes of nickel per year. Year-by-year HPAL output projections through 2028, https://fingfx.thomsonreuters.com/gfx/ce/qmyvmzzanpr/Projectedpercentage 20% HPALpercentage a 20% production rate a 20% increase 20% of the time 20th percentile 202028. PNG This year’s global nickel supply is expected to be around 2.6 million tonnes. Stainless steel mills will require around two-thirds of that, the most of which will be in China, while electric vehicles will account for less than 10% of demand. https://fingfx.thomsonreuters.com/gfx/ce/yxmvjaangpr/Nickelpercent20demandpercent/Nickelpercent20demandpercent/Nickelpercent20demandpercent/Nickelpercent20demandpercent/Nickelpercent20demandpercent/Nickelpercent20demandpercent/Nickelpercent20demandpercent/Nickelper a 20% increase a 20% increase PNGT.PNGT.PNGT.PNGT.PNGT.PNGT.PNGT.PNGT. Singshan announced in March that it would supply customers with 100,000 tonnes of nickel matte. “Other operators in Indonesia could follow Tsingshan,” said Michael Widmer of BoA Securities, who expects NPI supply to contribute to surpluses in 2024 and 2025. New recycling procedures are expected to make electric vehicles more environmentally friendly. Nickelper cent20marketper cent20balances.PNG https://fingfx.thomsonreuters.com/gfx/ce/ygdvzxxmkvw/Nickelper cent20marketper cent20balances.PNG (Pratika Desai and Mai Nguyen contributed reporting; Veronica Brown and Barbara Lewis edited the piece.)/n
