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Electric car boom spurs investor scramble for cobalt

Metal News - Published on Fri, 17 Feb 2017

Image Source: Reuters
Reuters reported that investors are buying up physical cobalt anticipating that shortages of the metal, a key component of lithium-ion batteries used in electrical cars, will spur prices to their highest levels since the 2008 financial crisis. Prices for cobalt metal have climbed nearly 50% since September to five year peaks around USD 19 a lb as stricter emissions controls boost demand for electric vehicles, especially in China, struggling with ruinous pollution levels in some cities.

Consultants CRU Group said that electric car and plug-in hybrid vehicle sales could hit 4.4 million in 2021 and more than six million by 2025, from 1.1 million last year.

By 2020, 75% of lithium-ion batteries will contain cobalt, whose properties allow electric cars to extend their range between charges, according to eCobalt Solutions, which produces battery grade cobalt salts.

Some 98% of cobalt is produced as a by-product of copper and nickel output, so for investors pure equity exposure to cobalt is tricky.

A Europe-based cobalt trader said that "Cobalt isn't going to massively impact share prices. The funds looked at LME (London Metal Exchange) cobalt contracts, but they aren't liquid enough for the millions they want to invest. So they are buying cobalt with the intention of sitting on it until prices rise, looking for USD 25 (a lb) or more."

One commodity-focused fund manager said that "Future demand for cobalt from the EV (electric vehicle) sector is looking tangible and is more positive than originally expected. China has some aggressive plans in terms of electric vehicles...It will be a major driver behind cobalt consumption growth."

China's State Reserves Bureau, in charge of building the country's stocks of commodities from oil to rare earth minerals, bought 5,000 tonnes of cobalt metal last year and in 2015, traders said. It is expected to buy more this year.

Source :

Posted By : Rabi Wangkhem on Fri, 17 Feb 2017
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