China is fully committed to ensuring the supply of lithium and cobalt, which is the key to controlling the world's electric vehicle market.

The emergence of electric vehicles has allowed Chinese companies to go global to find lithium resources. Now they are quickly reaching an agreement to obtain cobalt that is more geographically concentrated.

According to CiaranRoe, Standard & Poor's Global Platts Metals Price Manager, cobalt, a hard and lustrous gray metal, a by-product of copper and nickel ore, has seen the biggest increase in the price of various metals used to make electric vehicle batteries after two years of booming demand.

“Unlike manganese, lithium and nickel, the supply of cobalt is not limited to tonnage, but also includes the place of origin,” he said. “I can't think of another supply of goods so dependent on a country of origin, not cobalt.”

According to the US Geological Survey, about 60% of the world's unrefined cobalt production came from the Democratic Republic of the Congo in Central Africa last year, and its output is more than 10 times that of Russia, the second largest producer. Congo’s metal reserves are only half that of the world.

Roe pointed out that although the demand for lithium and cobalt is expected to increase two to three times in the eight years to 2025, the new source of cobalt is far less than lithium.

He said that although Canada and Finland are developing new mines, they need time to increase production.

Even considering the efforts of battery manufacturers to reduce their dependence on metals, the demand for cobalt in 2030 may rise to nearly 300,000 tons, the International Energy Agency (on behalf of 29 major oil consumers) said in a report last week.

“Cobalt prices have almost tripled in the past two years. The International Energy Agency says this is exacerbated by reserve activity at all levels of the supply chain and traders taking speculative positions.

RobinGoad, CEO of Fortune Minerals Canada, said that last year global refined cobalt production was about 105,000 tons, and the company is developing a mine in the northwestern United States.

Goad said that a 10-year mining project is usually required in Canada to begin production after the first determination of the deposit.

The Nico Cobalt-Gold-Neon project is expected to receive 65% of its revenue from cobalt, which was discovered in 1996.

According to Goad, so far, if it costs $125 million (about $16.5 million) to develop it, if it is commercialized, Nico’s feasibility study from 2014 suggests that it may be based on operating costs. One of the cheapest cobalt projects in the world.

But due to projected capital investment needs of up to 589 million Canadian dollars (including refineries), Fortune is seeking partners to provide most of the equity to reduce the project's interest expenses.

Partners will then receive their prorated production and have the right to purchase a share of Fortune at the market-linked price during the mine life cycle.

Goad said the company has received “expression interest” from 25 potential investors, including multiple potential investors in China who have obtained financial data and forecasts for the project.

These include miners, refiners, banks, financial investors, car and battery manufacturers.

Goad said that after the Congolese government’s mining license for foreign companies, investors are increasingly considering a more politically stable jurisdiction like Canada, which has just increased the government’s cobalt resource tax by five to 10% income.

Previously, Congo's power shortages and inadequate transportation infrastructure prevented China's Molybdenum in Henan from agreeing to acquire a 56% stake in Tenke Fungurume Mining in 2016 for a $2.65 billion deal. Tenke Fungurume Mining controls one of the world's largest copper resources and cobalt.

“China has gone further than any other country to ensure that the raw materials it needs to power new energy vehicles, including the acquisition of mines,” said Trey Nazarewicz, investor relations manager at Fortune. “By increasing control over cobalt supply, it effectively controls the lithium-ion battery industry to become a global electric vehicle production center.”

Shenzhen's battery maker and recycler GEM reached an agreement in March this year to buy one-third of the cobalt production from projects owned by international commodities Glencore in the next three years.

In the lithium industry, Sichuan Tianqi Lithium last month agreed to acquire a 23.8% stake in Chile's Sociedad QuimicayMinera for $4 billion. The company's global metal production share rose from 13% to 18%. London Roskill Information Services Battery and technical materials Departmental deputy manager David Merriman said.

According to GF Securities, the transaction, if completed, will have a substantial impact on two major projects in Western Australia and Chile, which provided a 46% lithium carbonate equivalent for global lithium resources last year.

According to data from cobalt product trader Darton Commodities, about 53% of global cobalt consumption last year came from rechargeable batteries, while 16% was used in metal alloys for strength and wear resistance.

Cobalt and nickel are often the two most valuable materials in electric vehicle batteries.

Last year, mainland China (the world's largest market) sold as many as 777,000 electric and plug-in hybrids, a 53% increase from 2016. Beijing's sales target for new energy vehicles is set at one-fifth of auto sales in 2025, up from 3.1% last year.

According to Roe, the demand and price of battery metal is difficult to predict due to rapid and unpredictable technological advances in battery chemistry.

Roe said: "This is a frontier market, and many supply chains still need to settle down." "Many technologies and assumptions change very quickly. In this environment, forecasting and pricing change very quickly."

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