MS - VIDEO - Battery Metals Update July 2019
At the end of June, a partial mine collapse was reported at Kamoto Copper Company’s KOV copper-cobalt mine in the Democratic Republic of Congo (DRC), leaving dozens of miners dead.
In July, the discussion around the dangers faced by artisanal miners in the country, as well as the security issues facing mining companies operating in the region, continued. Roskill estimates that artisanal miners produced 165,000 tonnes of cobalt in the DRC last year — roughly 15 percent of its output.
Also in July, the London Metal Exchange added cobalt metal producer Huayou Cobalt (SHA:603799) to its list of approved brands for delivery against its physical contract. The company produces 25 percent of global cobalt chemical products.
In other company news, despite facing opposition from some investors, Australian miner Jervois Mining (ASX:JRV) will take over eCobalt Solutions (TSX:ECS,OTCQX:ECSIF) after a majority of shareholders voted in favor of the C$57.6 million transaction. Shares of Jervois jumped more than 21 percent after the news.
Jervois will become the owner of the Idaho Cobalt Project, located in the heart of the Idaho Cobalt Belt. The project has a resource of 45.7 million pounds of cobalt at 0.59 percent cobalt in the measured and indicated categories.
For more on the cobalt space, check out our cobalt market update for Q2 2019, featuring the top trends in the sector. Prices continued to be under pressure during the period, falling to the lowest levels seen for some products for a number of years, according to analysts.
“With prices so low it presents a good opportunity for companies to invest in raw materials,” Benchmark Mineral Intelligence Senior Analyst Caspar Rawles said. “Chinese companies are typically more aggressive on such strategies, so we might see deals involving Chinese entities first, but the whole supply chain is looking at the space.”
Looking over to the lithium space, analysts at Morgan Stanley (NYSE:MS) released a report saying they expect prices to fall by 30 percent by 2025. Prices will continue their downtrend to reach US$7,200 per tonne that year as new technologies lower the cost of production and keep the market oversupplied.
“We believe most investors and the sell side underestimate the ability of companies to ramp up production of high-quality material and lower production costs in the medium term,” analysts said.
In Australia, miners continued to strengthen their relationships throughout the supply chain. Pilbara Minerals (ASX:PLS,OTC Pink:PILBF) signed an additional offtake deal with Chinese automaker Great Wall Motor (OTC Pink:GWLLF,HKEX:2333) that is set to start in August.
Sales volumes to Great Wall are expected to be in the range of 15,000 to 20,000 dry metric tonnes during the second half of 2019.
“Great Wall has been pushing hard to expand its presence in the lithium-ion supply chain. This has culminated in it requesting that Pilbara Minerals make offtake available earlier and at a greater volume,” Pilbara Minerals said in a statement.
Pilbara was not the only Australian miner to strike a deal with a Chinese firm in July. Altura Mining (ASX:AJM,OTC Pink:ALTAF) signed an offtake agreement with Chinese lithium materials producer Shandong Ruifu (SZSE:300243).
Looking over to North America, shares of Nemaska Lithium (TSX:NMX,OTCQX:NMKEF) jumped after news hit that Pallinghurst Group is contemplating a C$600 million investment in the company to develop the Whabouchi mine in Quebec. Nemaska’s share price had been under pressure since February, when the company announced a C$375 million financing shortfall.
“(Nemaska Lithium’s) sustainable approach to the mining of its world-class deposit combined with the use of innovative value-adding technology sets Nemaska Lithium apart. In our view, Nemaska Lithium’s lithium salt will rapidly become one of the most sought-after battery materials globally,” said Arne Frandsen, Pallinghurst managing partner.
For additional information on lithium, read our lithium market update for the second quarter.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.