Cobalt: All eyes on Europe

• The EU’s green plan to make EVs a centrepiece of the continent’s economic recovery has injected significant confidence into the global cobalt market and has also renewed momentum for responsible sourcing across the whole supply chain.
• We take particular note of recent reports and commitments to remove artisanal mine supply from value chains and if this is widely embraced across the industry over the course of the coming months, the cobalt market would rapidly move into deficit.
• While there are reports of significant stock build of artisanal cobalt concentrate in both the DRC and Zambia, there is no clear exit strategy for the owners of this material.
• Market sentiment has improved considerably and the industry is also increasingly seeing cobalt consumers and OEMs, globally, taking steps to ensure that they deal with clean cobalt, produced under circumstances which do not contravene internal procurement policies or international law.
• Recent government and industry association initiatives across the EU may also provide the boost required to put a floor to cobalt prices.
• The cobalt market also stands to benefit from Europe’s gradual transformation into a global battery powerhouse which is under way.
• Automakers will be expected by European governments to make corresponding investments in European battery materials and cell manufacturing, while the EU also looks to double investments to address the charging infrastructure gap.
• When the European Green Cars Initiative was introduced, as part of the European Economic Recovery Plan, in the aftermath of the global financial crisis, it was too early for a wholesale push into electric vehicles due to technological, financial and regulatory constraints and limited consumer appetite.
• In 2020, the technological hurdles are significantly diminished and electric vehicles have become popularised in no small part due to Tesla and the attendant markets for key battery metals including cobalt.
• The timing is perfect – European automakers that have geared up to the launch of electric vehicles over the past few years, are now nearing the launch moment and in a position to reap the benefits of a whole range of supportive prospective policies.
• Case in point, on 1 June France will introduce increased subsidies for electric vehicles. The subsidy paid to any individual purchaser of a 100% electric vehicle increases from EUR 6000 to EUR 7000, and professional fleets (which made up more than 50% of the domestic market in 2019) will benefit from incentives going up from EUR 3000 to EUR 5000. There is also a conversion bonus for people that want to scrap old vehicles in favour of a new purchase, and that bonus is higher if the individual chooses an electric vehicle (EUR 5000) over an internal combustion engine vehicle (EUR 3000). This is one among a plethora of beneficial policy examples that stand to strengthen the EVs market.
• Meanwhile, electric vehicle sales in Europe are reaching record levels in terms of penetration rates. While internal combustion vehicle sales slumped so far in 2020, electric vehicle sales have performed better than ever. Over the January to April period in 2019, 172 k battery and plug-in hybrid electric vehicles were sold across Europe – according to EV-Volumes.com. In 2020, sales reached 269 k vehicles over the same period, a growth of 56% y/y.

Read the article online at: https://www.globalminingreview.com/mining/03062020/cobalt-all-eyes-on-europe/