Cobalt
Cobalt: CATL partners with CMOC to co-develop copper-cobalt mine in the DRC
Chinese battery manufacturer Contemporary Amperex Technology Co., Limited (CATL) and cobalt miner China Molybdenum (CMOC) have inked a deal to co-develop copper-cobalt resources in the Democratic Republic of the Congo (DRC). CMOC stated, on 12 April, that CATL’s indirectly controlled subsidiary, Ningbo Brunp CATL New Energy, will acquire a 25% stake in CMOC’s wholly owned subsidiary, KFM Holding Limited (KFM), for US$137.5M. Upon completion of the transaction, CMOC and Brunp CATL will hold 75% and 25% in KFM, respectively. KFM holds a 95% stake in the Kisanfu copper-cobalt mine in the DRC.
Roskill View
Located 33km southwest to CMOC’s Tenke Fungurume mine in Lualaba, the Kisanfu mine represents one of the major undeveloped copper-cobalt deposits in the DRC, containing an estimated resource of 365Mt at 1.72% Cu and 0.85% Co (6.3Mt and 3.1Mt contained copper and cobalt respectively). CMOC acquired 95% of stake in Kisanfu for US$550M from Freeport-McMoRan in December 2020. The company is one of the top three cobalt miners globally, producing over 15kt cobalt-in-hydroxide from the Tenke operations in 2020.
The agreement between CATL and CMOC comes at the time when the payability of crude cobalt hydroxide, a key feedstock for battery-grade refined cobalt products, has recently reached a record high. In March 2021, hydroxide units almost traded flat to the underlying metal price in the spot market, a significant increase compared with 30-35% discount seen in mid-2020.
The cobalt metal price also surged by 75% since mid-2020. The more recent spike in cobalt prices can largely be attributed to a tightening intermediate market and robust battery demand and has again, brought supply and cost concerns to end consumers, including battery producers and OEMs.
While efforts to reduce cobalt use in electric vehicle (EV) battery formulations continue in the background, CATL’s commitment to upstream greenfield cobalt resources somewhat highlights the challenges for engineering cobalt out of EV batteries in the short-medium term. Despite the recent resurgence of LFP batteries, Roskill expects NCM and NCA-based cathodes will remain the most common cathode type in EV batteries in 2021, accounting for around 70% of cathode material used in sold EVs on a weight basis. Additionally, in portable electronics, the largest end-use application for cobalt, the role of cobalt rich LCO cathode remains dominant.
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