Cobalt's up three cents. Lithium batteries are under pressure.

“In 2017, the price increase of upstream raw materials made battery manufacturers feel the pressure.” Li Fengmei, vice president of Shenzhen BAK Battery Co., Ltd., told the reporter. Cobalt is the largest upstream metal. As of the end of December 2017, the London Metal Exchange (London Metal Exchange, hereinafter referred to as LME) cobalt prices rose to $ 75,205 / ton, up 130% from the beginning of the year. LME is the world's largest market for futures and options for base metals and other metals.

At present, the main technical route of new energy passenger vehicle batteries is ternary batteries, IE lithium batteries with lithium nickel-cobalt manganese acid or lithium nickel-cobalt aluminate as the positive material, and the precursor materials are nickel, cobalt, manganese or nickel. Cobalt, aluminum as raw materials, Cobalt is indispensable as a stabilizer.

By the end of November 2017, the total number of new energy vehicles in the history of the world had reached 3.3 million. In 2018, the number of new energy vehicles in the world is expected to reach 1.7 million to 2 million, and the total number of cards in history will exceed 5 million. The rapid growth in terminal demand has made cobalt, which was once oversupplied in the 3C era, also in short supply.

British analyst CRU predicts that cobalt stocks will fall from 4.65 months in 2015 to 2.58 months in 2018.

Senior figures from well-known domestic battery companies told reporters that in order to pursue higher energy density and get rid of the cost pressure brought about by the rise in cobalt prices, increasing the proportion of nickel in the ratio of raw materials for ternary batteries has become an industry consensus. According to South Korea's SNE research, global power cell output will reach 31.7 billion U.S. dollars in 2020 and a further 97.9 billion U.S. dollars in 2025. As a huge $100 billion market, the rise in cobalt prices has driven technological change in the $100 billion battery market.

At the same time, the high nickel route has put forward higher requirements for technology and equipment, which will also accelerate the elimination of small and medium-sized battery manufacturers.

Up 130 % a year, China's external dependence exceeds 80 %

With the rapid development of new energy vehicles around the world, cobalt has once again become a scarce product. According to the Metal Bulletin (MB) data, as of the beginning of 2018, the global spot cobalt price has risen to $815,48/ton, up 145% from the beginning of 2017 at $33,280/ton. The LME futures cobalt price also rose to 75,205 US dollars / ton, an increase of 131.52%.

The global spot cobalt market has always lacked a mature pricing system. Although LME launched a cobalt metal futures contract in 2010, the contract delivery was not active until 2017. Therefore, the purchase and sale of cobalt has long been based on MB twice a week. As the basis for the transaction.

The increase in cobalt prices is so large that it is related to both supply and demand and artificial speculation.

Cobalt is widely distributed on the earth, mainly associated with copper and nickel, and independent cobalt resources are only 17%. However, cobalt is very low in tailings and is mainly distributed in nature in the form of isomorphism or inclusions. There are not many global reserves of cobalt, and China is particularly scarce. According to Zhiyan Information, in 2016 China produced 45,000 tons of refined cobalt (referred to as smelted and purified cobalt), but the self-produced cobalt ore contained only 0.77 million tons of metal, and the external dependence of cobalt resources exceeded 80%.

According to the United States Geological Survey(USGS) statistics, in 2016, cobalt global reserves were 7 million tons of metal(metal tons refer to the quality of a specific metal contained in various mineral resources), of which Congo(gold) reserves reached 3.4 million tons of metal., accounting for 48.6 % of the total reserves. The second largest reserve is Australia, with about 1 million tons of cobalt. Chinese cobalt reserves are only 80,000 tons of metal.

In the battery raw material metal, the global reserves of cobalt are less than one-half of that of lithium and less than 9% of nickel. According to the domestic industry information agency and release center Antaike data, the global refined cobalt (referred to as refined cobalt by smelting) in 2016 has a capacity of 147,300 metal tons and a production of 190,528 metal tons. The global cobalt consumption in 2016 was 104,231 tons of metal tons, of which the amount of batteries used was 5.8331 million metal tons, leaving 5,297 metal tons. It is the same as the remaining 5,092 metal tons in 2015.

Man-made factors have also contributed to the surge.

Cobalt is a scarce metal and its production capacity has been relatively concentrated. In terms of the Congo(gold), which has the largest reserves of cobalt, there are 10 mines. Among them, the Swiss Glencore Company has 5 mines, Luoyang Moly Industry, Kazakhstan Eurasian Natural Resources Company, the United Arab Emirates Shalina Resources Company, China Minmetals Group and Jinchuan Group Corporation each control 1 mine.

Glencore controls about 67 per cent of the cobalt resources in mines in the Democratic Republic of the Congo. In fact, Glencore supplies 30 per cent of the world's cobalt resources, about 20 per cent of artisanal mining and 50 per cent of the remaining 10 traders.

Concentration of production capacity has led to the ability of large companies with an absolute number of monopoly prices. As the world's largest supplier of cobalt resources, Glencore has controlled production capacity, such as the suspension of the Katanga copper cobalt mine in the Democratic Republic of the Congo.

In addition, the continuous fermentation of the hand-mining event resulted in a decrease in cobalt production. In 2016, international organizations claimed that there were a large number of artisanal miners and even child workers in the cobalt mining industry in the Democratic Republic of the Congo, which violated human rights. Since then, Glencore, Freeport and other companies have stated that they do not deal with artisanal miners. In November 2017, LME launched an investigation into the suspected use of child labor at the source of supply. Under the pressure of international public opinion, the application enterprises of the terminal force the smelters in the middle reaches to specify the source of raw materials and do not use manual mining. This further reduced cobalt production.

Lifengmei said cobalt prices were driven by expectations of shortages. While the industry is saying there may be a shortfall in cobalt production, no downstream battery company has stopped production because it does not have cobalt and can buy it if it wants to.

Cobalt prices are expected to exceed 600,000 tons in 2018

At present, the supply and demand of cobalt are still in a tight balance, but with the increase in sales of new energy vehicles, the supply of cobalt may be in a short period of time.

Global sales of new energy passenger vehicles will continue to grow at a high rate in 2017, reaching 1.15 million vehicles, and the share of new energy passenger vehicles is expected to increase to 1 %.

By measuring the amount of cobalt used in bicycles by 10 kilograms, if the global sales of new energy passenger vehicles can reach 1.15 million vehicles in 2017, the amount of cobalt used will reach 11,500 tons. Dongxing Securities predicts that in 2018, global sales of new energy vehicles will be 1.5 million vehicles and the amount of cobalt will reach 15,000 tons.

With the rapid development of new energy vehicles, cobalt production did not increase accordingly in 2017. Overall production of the world's leading cobalt producers fell by about 6 per cent in the first three quarters of 2017. Glencore's output in the first three quarters of 2017 was 19,800 tons of metal, a year-on-year decline of 5.7 %; Production at Tenke, Sherritt and Vale in Luoyang Molybdenum fell 8.9 per cent, 3.9 per cent and 0.9 per cent, respectively, in the first three quarters of 2017.

In response to the increase in demand, domestic and foreign companies will increase their production capacity in 2018, such as the early stage cobalt hydroxide project of the 5,000-ton electrolytic cobalt production line project of Congo's subsidiary Congo. Han Rui Co., Ltd. told the reporter that after the 2000 tons of cobalt hydroxide project was put into production, the 3,000 tons of cobalt hydroxide project of the Meite plant has been put into production, but it still takes time to release the production capacity. The kambove and PE527 mines owned by Huayou Cobalt in Congo (Golden) will also be put into operation in 2018, with a capacity of 3,000 tons.

Glencore announced the reopening of the Katanga copper cobalt mine.

Antaikegu analyst Wang zhengxin told reporters that cobalt will be in a tight balance in the short term from the perspective of upstream production capacity and downstream consumption.

But given the country's poor infrastructure, energy scarcity and widespread government corruption, there is uncertainty that these capacity expansion will be on schedule. In addition, the situation in Africa will also affect exports of crude processed cobalt from the Democratic Republic of the Congo to South Africa for export.

Mr Wang zhengxin said that if those capacity could be released as scheduled, cobalt prices would rise steadily in 2018, not as sharply as they did in 2017. It should rise to 600-650,000 tons in 2018.

The high nickel route will trigger the collapse of the battery plant.

The high price of cobalt has put pressure on midstream battery companies. Lifengmei said that as cobalt prices continued to rise, companies that make ternary batteries began to develop high nickel, reducing the use of cobalt.

Nickel is one of the most resource-rich metals in the world. Its content in the earth is second only to Silicon, oxygen, iron, and magnesium, ranking fifth. At present, the proven reserves are as high as 720 million tons of metal. Many domestic companies producing nickel-cobalt manganese batteries are transitioning from Type 111 to Type 523, Type 622, or even Type 811. The above different models represent different ratios of the three raw materials of nickel cobalt manganese, such as 111, whose nickel cobalt manganese ratio = 1:1:1, and so on.

China Chemical and Physical Power Industry Association Secretary-General Liuyanlong told reporters that 523 to 622 and 811 are the current development direction of power batteries. Now the demand for energy density in the subsidy policy is increasing. High nickel is the trend.

High nickel battery production, however, is not easy. Since nickel is an active metal, with the increase of nickel content in the ternary, the structural stability of the material is reduced, resulting in a significant reduction in the cycle life and safety. Shanghaijie new power battery system Co., Ltd. engineering deputy chief engineer Zhuyulong told reporters, the higher the nickel ratio, the whole positive material thermal stability is worse. In the event of high temperature, external force impact, etc., high nickel batteries will have safety hazards. It is also a big problem that gas production can cause battery swelling when high-nickel batteries are charged.

In addition, high-nickel ternary materials can not be exposed to air during battery assembly and require a pure oxygen atmosphere. Senior figures from well-known domestic battery companies told reporters that since domestic battery companies started from the production of nickel cobalt manganese 111, and nickel cobalt manganese 111 assembly does not require pure oxygen atmosphere, so the domestic battery factory has almost no oxygen burning process. In order to mass-produce the nickel cobalt manganese 811 model, it is necessary to redesign the plant and equipment, and the backwardness of the equipment manufacturing process is also a major problem that restricts the production of the nickel cobalt manganese 811 model.

Therefore, the high technology maturity of nickel cobalt manganese 523, followed by nickel cobalt manganese 622. The nickel cobalt manganese 811 model only Bic battery claims to achieve mass production of nickel cobalt manganese 811 cylindrical power cells.

It is understood that in addition to the Bic battery, the 811 projects of Shanshan Energy, Ningbo Jinhe, Tianjin Bamo, Penghui Energy and other companies have also been put into production, and the 811 projects of Dangsheng Technology and Tianli Lithium have entered the pilot. For the gas production problem of nickel cobalt manganese 811, various mainstream battery manufacturers and positive material manufacturers are engaged in technical research.

At present, although many companies claim that the 811 project will be put into operation, it is unknown how many new energy vehicles are equipped with 811 batteries.

These senior figures expect the nickel cobalt manganese 811 system to be finished by the end of 2018. However, it will take time for the technology of nickel cobalt manganese 811 to be fully popularized.

It is expected that metal lithium and cobalt will continue to tighten around 2019, and the pressure of rising raw materials prices will also drive the breakthrough of lithium battery technology.

It's very likely that 30 % of companies will fall into this shuffle. Lithium-electric "Davos" academic committee secretary general Moke said that in the first ten months of 2017, the cumulative installed capacity of lithium batteries was 18.1 GWh, and a total of 76 battery manufacturers formed an effective installed supply, compared with 109 in 2016. That means about 30 battery plants could fail in 2017.

In the fourth quarter of 2017, BYD, Yinlong and other domestic companies began bidding for lithium power equipment. According to the research institute of high industrial production and research of lithium electricity, from the long-term plan, according to the exit mechanism of fuel trucks in various countries, the demand for lithium batteries will be as many as dozens of times as expected by the current market.

This also means that the market space for the equipment industry will reach 700 billion yuan by 2025, with an average annual demand of 100 billion yuan, while the industry output value in 2017 will only be more than 10 billion yuan.

The page contains the contents of the machine translation.