At yet, some now worry that EV sales could fall short of projections, or even materialize more slowly than expected. In recent years, investors seemed to be most worried about the risk of running out of critical battery metals to keep pace with explosive demand for EVs. Battery Raw Materials: Too Much or Too Little? While some are predicting that prices for EV metal materials have already bottomed out, our view is that it is still premature to call the bottom, despite the improvement in cobalt and nickel prices in recent weeks. Moreover, recent questions have arisen about whether China can maintain the rate of growth in EV sales, given reduced subsidies from the government. While demand will undoubtedly pick up as we approach the much-anticipated EV sales boom in 2022-2023, it remains to be seen whether these metals will be in quite so critical short supply as previously thought. Lithium, previously a rising star of Li-ion battery (LIB) supply story, now suffers from weak prices for spodumene, lithium hydroxide and carbonate. In our view, unusually high inventories of raw material and finished goods stockpiled at the mines and throughout the Chinese supply chain will act to offset the shock of the Mutanda mine shut down, at least through the end of next year.īy comparison, prices of other battery metals such as lithium, manganese, and graphite have disappointed over the past year. Refined Cobalt prices have since retreated to around $17/lb, reflecting expectations of a more balanced market in 2020. Lower cobalt prices and high costs were cited as the justification for shutting down. Meanwhile, Glencore has been attempting to get the Congolese government to repeal the super profits tax, and higher royalties which came into effect in 2018 with the new mining law. Refined Cobalt prices also soared during September to above $18/lb (+50 percent) due to Glencore’s announcement that it plans to put its Mutanda Cu-Co mine in the DRC on care and maintenance at year end effectively removing 27kt of cobalt from the market in 2020 (approximately 20 percent of total global mined cobalt output).
It is not clear how China will manage to cover this potential shortfall in 2020, as laterite ore shipments from the Philippines, China’s other largest supplier, are not expected to increase further due to depleted resources and lower grades. Indonesia’s Ni ore exports this year are expected to reach 29 million tons (+45 percent), equivalent to about 325kt of recoverable Ni contained.
Indonesia exported 20 million tons of Ni laterite ore in 2018, all of which went to China for the production of nickel pig iron (NPI), an important feedstock for the production of stainless steel. Although prices have since settled down in the range of $16,000 – 16,500/ton, the market is finding support from historically low LME warehouse stocks. Prices surged by 50 percent in early September, hitting over $18,300/ton (8.3 cents per lb), the highest level in five years.
Nickel has been the best performing LME metal so far this year thanks to the Indonesian government’s surprise announcement to move up a ban on the export of nickel ore to Janu– two years earlier than planned.
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