Cobalt, the element symbol Co, has a silvery white and slightly pinkish surface. It ranks 27th in the periodic table and is located between iron and nickel.
The price of this ferromagnetic metal has risen all the way.
In the first quarter of 2021, the cobalt price reached 345,000 yuan/ton, a year-on-year increase of 26% and a month-on-month increase of 28%. It was not until the off-season of the second quarter that the performance stabilized.
The performance of various cobalt manufacturing companies has soared. Taking Huayou Cobalt, Luoyang Molybdenum and Hanrui Cobalt as examples, the revenue and net profit growth in the first quarter reached more than 45%. Huayou Cobalt, China's largest cobalt product producer, has revenue of 6.424 billion yuan and a net profit of 654 million yuan, a year-on-year increase of 256%. In the past year, its stock price has risen roughly 150%.
The popularity of cobalt is that it is an indispensable raw material for the manufacture of ternary lithium batteries, which directly affects the cost of power batteries. It can be said that mastering the mining and sales network of cobalt is equivalent to grasping the key to new energy vehicles. As a result, from the Ningde era to Tesla, and even upstream cobalt manufacturers, they all spent money to "grab cobalt" at the end.
Hard to make a car without cobalt
The importance of cobalt is based on its characteristics such as high temperature resistance.
Cobalt can stabilize the layered structure in the ternary cathode material (containing three metal elements of cobalt, nickel, and manganese), and improve the cycle life and rate performance of the material.
2021Q1 performance of 4 cobalt companies
Data source: company quarterly report
Unfortunately, the global cobalt ore resource reserves are uneven and the output is scarce. In 2020, the global cobalt production will be about 140,000 tons, and it will be in the hands of a few companies.
Congo (DRC) is the country with the largest amount of cobalt ore resources in the world. It is the largest producer of cobalt ore and occupies a leading position in the supply chain. Together with Australia and Cuba, the three countries account for 3/4 of the total global cobalt reserves.
China is the world's largest cobalt refining and consumption country, accounting for 67% and 52% of the global share respectively, but the output of cobalt ore is only about 1% of that.
In terms of industry, the world's top ten cobalt mining companies dominate 75% of the total cobalt production. Glencore, headquartered in Switzerland, owns about 30% and is the world's largest cobalt miner. China's Luoyang Molybdenum and Jinchuan Group also occupy a certain position.
With the explosive growth of the electric vehicle market, China, as the world's largest new energy vehicle market, has shifted its cobalt consumption structure from the traditional industry to the battery industry.
SMM Cobalt Industry Senior Analyst Huo Yuan said in a public place recently that from 2000 to 2020, the flow of China's cobalt raw materials will shift from alloys and magnetic materials to lithium cobalt oxide and ternary batteries. Take 2020 as an example, battery consumption will dominate, and the combined proportion of lithium cobalt oxide batteries and ternary batteries will reach 57%.
Due to the low output of cobalt ore, China's cobalt resources are highly dependent on imports, and the compound demand for cobalt from ternary materials increases by 56%. Huo Yuan said that the import volume of cobalt concentrates is decreasing year by year, and the import of cobalt intermediate products is increasing year by year; the demand for cobalt for lithium cobalt oxide materials is decreasing year by year, and the demand for cobalt for ternary materials is increasing the fastest.
With low output and high concentration, the price of cobalt fluctuates violently whenever there is a turmoil. The main high-endurance electric vehicles rely on ternary lithium batteries, and the batteries are inseparable from cobalt. As soon as the trend of vehicle electrification starts, the price of cobalt has skyrocketed.
Cobalt is also the most expensive material in power batteries. The price is about 3 times that of nickel and 50 times that of manganese. Therefore, the choice of different metal elements greatly affects the total cost of the battery.
According to the different proportions of nickel, cobalt, and manganese in the cathode materials, the ternary lithium batteries on the market are mainly type 111, type 523, type 622 and type 811, and the cobalt content is 21.3%, 12.2%, 12%, 6 %, the higher the nickel content, the less the cobalt content, the higher the energy density of the corresponding battery module, and the lower the cost. However, the corresponding process difficulty and safety challenges are also higher.
In 2020, the ternary materials market will still be dominated by models of 5 series and below, and the proportion of high nickel 8 series materials will be 24%, and the cobalt content of most materials will be above 12%.
In the selection of high-nickel and low-cobalt technology routes, the battery that can be mass-produced with the least amount of cobalt is NCM811. Its cathode material nickel, cobalt, and manganese ratio is 8:1:1. CATL has already supplied externally and is supporting enterprise products. Including BMW X1 plug-in hybrid, Volkswagen MEB series, GAC AionS, Xiaopeng P7, Weilai ES6, etc.
Among the ternary lithium batteries of the Ningde era, NCM811 batteries account for about 20%, and their cobalt content is 6%, which translates to 0.09kg of cobalt per kWh for power batteries.
Taking the Weilai ES8 model equipped with 84kWh battery specifications as an example, the car battery product requires at least 7.56 kg of cobalt. If calculated at 350,000 yuan/ton, the cost of cobalt alone for a battery of this specification is as high as about 2,646 yuan.
According to data from Benchmark, a battery supply chain research organization, Model S requires about 11kg of cobalt per vehicle, so the cost of cobalt alone is about 3850 yuan.
Spending money to grab resources
Cobalt is a rare commodity, and it has become the target of competition for industry players, as well as unanimous choices. The first to sound the clarion call for the battle was Tesla.
In June 2020, Tesla was exposed and plans to sign an agreement with Glencore to purchase cobalt metal, supplying up to 6,000 tons of cobalt metal per year for the production of lithium batteries for electric vehicles.
Based on the annual cobalt output of about 140,000 tons, Tesla is equivalent to locking in 4.2% of the global annual output.
"Whether it is a battery manufactured by our supplier or by ourselves, the cost partly depends on the price and availability of lithium, nickel, cobalt or other raw materials. The price of these materials fluctuates and the available supply may be unstable." Sla said in the 2020 annual report.
According to estimates, each Model 3 needs 4.5kg and 6000 tons of raw materials, enough to meet the demand of 1.33 million Model 3.
In March 2021, GEM, a manufacturer of ternary precursors (a key material for the preparation of ternary cathodes), announced that it had also signed a long-term strategic supply order with Glencore. The latter promised to supply no less than 137,800 tons in the next 10 years. Cobalt resources.
In addition to locking cobalt resources through orders, there are even leading companies that "spend money" upstream.
In April this year, CATL announced that the company plans to focus on its main business and invest in high-quality listed companies in the domestic and overseas industrial chains by means of securities investment, with a total investment of no more than 19 billion yuan.
In the same month, CATL acquired a 25% stake in KFM Holdings, a wholly-owned subsidiary of Luoyang Molybdenum, with a capital of 900 million yuan. KFM controls one of the world's largest undeveloped copper and cobalt mines.
On May 21, at the 2020 Annual General Meeting of Shareholders, Ningde Times Chairman Zeng Yuqun said frankly that raw materials have risen very high and will have a greater impact on the company’s costs. “We have also made some arrangements for lithium, cobalt, and nickel, (suppliers) ) It is necessary to truly understand that only a reasonable price can (can) be achieved in the long run."
For suppliers that have raised prices, Zeng Yuqun said: “If you try to increase prices desperately, they will have a little frustration because we can exclude it.”
“Ensure your own price and cost advantage at the source.” Longzhong Information New Energy Industry Analysis Shi Zhu Mingzhe analyzed that as the price of cobalt continues to rise, CATL is no longer satisfied with long-term orders to lock cobalt resources, but hopes to cooperate with mature cobalt mining companies to reduce supply chain risks.
Another power battery company Yiwei Lithium Energy and its controlling shareholder also spent 1.8 billion yuan to participate in the non-public offering of Huayou Cobalt. As early as 2006, Huayou Cobalt established a wholly-owned subsidiary CDM Company, and locked up upstream resources and raw materials through multiple rounds of investment in Congo (DRC).
Around cobalt, the upstream and downstream industries are deeply integrated to reduce the risk of price volatility.
"Now the powerful cobalt companies are doing upstream and downstream expansion." Zhu Mingzhe told the reporter of "21CBR" that the profitability of pure smelting business is not high. From cobalt to ternary materials and batteries, downstream products have greater profit margins.
Difficult to "de-cobaltize"
The main producing areas of cobalt have also seen the value of cobalt and are seeking the pricing power of cobalt supply.
In 2019, the Congolese (DRC) government promulgated a new law requiring all artisanal cobalt ore transactions in the country to be conducted through a newly established state-owned cobalt company.
Market share of cathode materials in 2019 (by product)
Market share of cathode materials in 2020 (by product). Data source: Gaogong Industry Research
The newly established company is a subsidiary of the Congolese (Golden) State-owned Mining Corporation (Gécamines), referred to as EGC. It will be put into operation at the end of March 2021. It has a monopoly in the cobalt industry and controls the purchase, processing and processing of domestic artisanal cobalt mining. , Sales and export, and the entire industrial chain.
Bloomberg predicts that EGC may control nearly 15% of global cobalt ore production.
In order to get rid of the dependence on cobalt raw materials, in recent years, the power battery field has set off a technological trend of "removing cobalt", reducing or even completely eliminating the use of cobalt in ternary batteries.
Tesla has a development plan for cobalt-free batteries.
In 2020, Musk said that there are plans to halve the cost of batteries, including changing electrode materials and improving battery design and production integration processes. "If nickel is maximized and cobalt is reduced to zero, the price can be reduced by 50%. "
Ningde Times also stated that it has its own cobalt-free battery technology reserves, research and development are progressing smoothly, and it is looking for ways to improve the supply chain.
In 2020, the power battery company Honeycomb Energy released two cobalt-free batteries, claiming that it can achieve a cruising range of up to 880 kilometers.
Zhu Mingzhe said that traditional lithium iron phosphate batteries are cobalt-free and relatively safe, but they are mostly used in entry-level electric vehicles. As the industry refers to "cobalt-free", the main purpose of the long-life ternary lithium battery is to remove cobalt. It is still difficult to leave cobalt in the short term.
In his view, the hype on the field of "cobalt-free" technical solutions is more like putting pressure on upstream cobalt companies.
In February of this year, someone asked about the impact of "cobalt-free" technology on the future development of Huayou Cobalt, and the company replied, "In the future, ternary materials will still be the mainstream technology route for new energy vehicles, especially mid-to-high-end passenger cars."
Despite the growth in demand Affected by various political, technological and other uncertain factors, the International Energy Agency (IEA) still predicts that in 2040, the demand for cobalt may increase by 6-30 times.
Zhu Mingzhe said that by the end of the second quarter, the cobalt market will enter an active period of purchase inquiries, and prices may turn firm.
Since the beginning of this year, new and old car-making forces have announced aggressive electric car expansion plans. The competition for cobalt may be difficult to stop in the short term.
