Creating cleaner transport via fleets of electric cars, doesn’t mean the world will get beyond clashes over natural resources. It just means the fight will extend to different resources.
Top global commodities trader Glencore sees cobalt as a crucial in the race to lead future electric car development. Control over the resource may, in fact, become a lever to controlling future markets.
Cobalt is key in the manufacture of lithium-ion batteries, and in extended-range uses for electric cars. The Democratic Republic of Congo is home to around 60-percent of the world’s cobalt production.
Chinese companies have been quick to secure supplies from Congo and minimize any future supply chain vulnerability, the Financial Times reported, citing Glencore Chief Executive Ivan Glasenberg speaking earlier this month.
This may develop into a competitive advantage in batteries, which could be become a lever to seize auto export markets, according to the FT report from the Future of the Car Summit.
Carmakers in the the United States and Europe would be naive to think that they can always rely on China to supply batteries for electric car fleets, Glasenberg said. In the case of a battery shortage, Chinese companies may rather supply the whole car instead, he said.
Glencore has long term contracts with to supply cobalt to Chinese companies. It would also consider selling mines to western car manufacturers, yet has had no such approaches, according to the report.
Glencore is expected to produce about 35,000 tonnes of cobalt this year, a figure that could increase by 25,000 to 30,000 if the company decides to develop a new ore body at Mutanda, a mothballed mine Congo. That mine may come on stream in the next 18 months, the FT said citing Glasenberg.
Glencore plans to start Mutanda, which also produces copper, next year, Reuters reported today citing an unidentified source. Copper and cobalt prices have soared in 2021, putting the development of Mutanda into focus, according to Reuters.
It may seem to be a very big logical jump, by Glencore, from restarting an idled mine to a potential future shortage in resource. Yet commodities traders have long played big swings in supply and demand to much profit.
Auto use and manufacturing went through a huge pandemic-related pause in 2020. What will be on the other side of the pandemic is not totally clear.
Governments, and possibly consumers, appear to be shifting to adopt greener, more socially responsible approaches. That would include large scale shifts in auto fleets electric propulsion as opposed to gasoline or diesel.
Just as electricity doesn’t just come out of the wall, batteries don’t just appear in the store. Natural resources including copper, cobalt and various others will come into play.
Setting aside corporate interests or timing, it would be unwise to ignore one of the world’s largest commodities traders speaking publicly on future battery production.