Transitioning to electric. Photographer: Muhammad Fadli/Bloomberg
If you’re thinking of investing in obscure battery materials to take advantage of the energy transition, there’s one company you should be watching right now: Zhejiang Huayou Cobalt Co.
Shares in the Shanghai-listed business have soared four fold over the past three years, to the point that it’s now worth more than Nippon Steel Corp., until recently the world’s third-largest steelmaker. What’s more important, though, is how it’s been spending its money.
Prices of the metals used in cathodes for electric vehicle batteries have been on a run in recent months. Huayou’s key product is cobalt, which prevents high-performance cells from overheating and is changing hands for 503,000 yuan ($80,000) a metric ton in Shanghai — almost twice its level 12 months ago. It’s also heavily involved in supplying nickel, which helps pack more energy into the battery itself and this month hit $24,028 a ton, its highest in more than a decade.
Those bubbly prices are based on expectations that there’s insufficient raw materials out there to match demand growth for electric vehicles, something that’s also been driving a run in lithium. About one in five cars sold in Europe and China in the September quarter of last year were plug-in varieties, a share that will only rise as battery costs fall. Cobalt demand will more than double to more than 300,000 tons a year over the current decade, according to BloombergNEF. Swathes of Europe, North America and Asia plan to phase out petroleum-powered cars altogether during the 2030s.
The problems with cobalt and nickel are well-publicized. About 70% of the world’s cobalt is mined in the Democratic Republic of Congo, where about a fifth of output comes from small-scale mines that use child labor to dig ore in unhealthy conditions.
Shares in the Shanghai-listed business have soared four fold over the past three years, to the point that it’s now worth more than Nippon Steel Corp., until recently the world’s third-largest steelmaker. What’s more important, though, is how it’s been spending its money.
Prices of the metals used in cathodes for electric vehicle batteries have been on a run in recent months. Huayou’s key product is cobalt, which prevents high-performance cells from overheating and is changing hands for 503,000 yuan ($80,000) a metric ton in Shanghai — almost twice its level 12 months ago. It’s also heavily involved in supplying nickel, which helps pack more energy into the battery itself and this month hit $24,028 a ton, its highest in more than a decade.
Those bubbly prices are based on expectations that there’s insufficient raw materials out there to match demand growth for electric vehicles, something that’s also been driving a run in lithium. About one in five cars sold in Europe and China in the September quarter of last year were plug-in varieties, a share that will only rise as battery costs fall. Cobalt demand will more than double to more than 300,000 tons a year over the current decade, according to BloombergNEF. Swathes of Europe, North America and Asia plan to phase out petroleum-powered cars altogether during the 2030s.
The problems with cobalt and nickel are well-publicized. About 70% of the world’s cobalt is mined in the Democratic Republic of Congo, where about a fifth of output comes from small-scale mines that use child labor to dig ore in unhealthy conditions.
Abundant nickel laterite ores, which are mined in vast quantities from the tropical soils of Indonesia, the Philippines, and New Caledonia, are used for lower-quality products such as stainless steel and were traditionally considered unsuitable for turning into battery-grade nickel. Bloomberg UK - link - David Fickling - link - more like this (China) - link - more like this (metals) - link - users, dealers and miners - link
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