The Resource Angle

[neroden]

Well, the buyer always wants a fixed price. The mining industry is just going to have to deal with that. Tesla wants a fixed price too, and eventually they're going to get it.

The "they want to reserve the right to not take metal they don’t need", however, is a deal-breaker. Tesla *commits* to its purchases, which is what makes the miners willing (sometimes) to accept a fixed price.

 

[RobStark]

Well, the buyer always wants a fixed price. The mining industry is just going to have to deal with that. Tesla wants a fixed price too, and eventually they're going to get it.

The "they want to reserve the right to not take metal they don’t need", however, is a deal-breaker. Tesla *commits* to its purchases, which is what makes the miners willing (sometimes) to accept a fixed price.

$100/lbs for Cobalt.

Sure, the miners will take all the risk. For a price. Then they can hedge.

Same with VW asking battery makers to build 40 GFs for the entire automotive industry by 2025 and 4 for VW without VW committing to buy X amount of battery cells at Y price.

 

[wdolson]

“The tender doesn’t actually tell you how much cobalt they want. They tell you how many EVs they want to make, you have to work out the cobalt content yourself,” one cobalt industry source said.


“They want a fixed price, which won’t work for people who need security and they want to reserve the right to not take metal they don’t need,” another cobalt source said. “They want producers to take all the risks ... they want an option at low prices, for long maturities at zero cost.”

“There’s a section on sustainability... asking what processes are in place to make sure the cobalt does not come from child labour in the DRC,” one said.

The auto industry is used to suppliers taking all the risk for most of the components that go into cars. I don't think they can get away with that with batteries right now. With well established components, the real risk to the supplier is minimal and they are willing to take it, but with an emerging technology that requires tremendous capital investment to get going, pushing all the risk to the suppliers isn't going to work. The need for batteries is likely going to be so steep in a few years governments are going to have to step in to help build battery plants.

 

[neroden]

I am sort of disgusted by VW's not-impressive tender; there's no way the miners will do all the work.

Tesla was apparently making serious long-term contract offers (X metric tons of particular mineral per year for Y years at price Z). The reliability of such a contract can allow a miner to get finance for mine expansion, so it's something they'll consider.

 

[AudubonB]

The above posts are exactly right: if, indeed, VW's position has been stated correctly, it is so egregiously absurd as to make me wonder if the company mightn't have bad-mouthed its way out of being able to secure any cobalt.

Monopsony power is great until it isn't....and VW never even perched in that catbird seat. Except, as wdolson suggested, it was taking the position it might have with some of its captive component suppliers and applying that to a miner.


Oops.

 

[AudubonB]

That said, however, in The World As It Really Works, most commodities and other low value-added, near-raw materials are obtained through brokers, etc.

Aluminum - and aluminium, too - is a bit of an exception here in that there is a degree of vertical integration in that metal not seen in iron/steel or copper - to say nothing of in the lesser industrial metals like the alloyers: Ni, Va, Cr, Ti and so on...including Co. But even with Al, I can get you effectively whatever quantity of whatever alloy all day long, year-in and year-out.

Making that purported story about VW so much more the bizarre.

 

[TNEVol]

Please forgive me if already posted elsewhere but I got caught up in a discussion about Standard Lithium and started looking at it. Any opinions insights?

 

[RobStark]

But even with Al, I can get you effectively whatever quantity of whatever alloy all day long, year-in and year-out.

Making that purported story about VW so much more the bizarre.

Global production of aluminum in 2016 was 57.6M metric tonnes. By weight aluminum is just over 8% of the earth's crust. It is the third most abundant element in the earth's crust.

Global production of Cobalt in 2016 was 123k metric tonnes, 2015 126k metric tonnes, and in 2014 123k metric tonnes. Currently, the battery industry uses ~42% of that supply. Cobalt is the 32nd most abundant element in the earth's crust.

At full capacity GF1 is going to need roughly the entire 2016 cobalt production. You can't willy nilly go the the London Metal Exchange in 2020 and buy 11k metric tonnes of cobalt per month. That would cause grotesque bidding wars with battery rivals, jet engine makers etc.

All the battery makers are expected to become more cobalt efficient over time, maybe eliminating cobalt in their chemistries in due course.

But you can't bank on that for 2018-2025 BEV production.

 

[kenliles]

it is so egregiously absurd as to make me wonder if the company mightn't have bad-mouthed its way out of being able to secure any cobalt.

Making that purported story about VW so much more the bizarre.

so bizarre, my first thought, was
they must have figured out a way to extract it from their own diesel exhaust

 

[AudubonB]

Careless wording:

I should have written: "Making that story about VW's purported actions so much more the bizarre."

If your Mod can't write clearly, what hope is there?

 

[transpondster]

Global production of Cobalt in 2016 was 123k metric tonnes, 2015 126k metric tonnes, and in 2014 123k metric tonnes. Currently, the battery industry uses ~42% of that supply. Cobalt is the 32nd most abundant element in the earth's crust.

At full capacity GF1 is going to need roughly the entire 2016 cobalt production. You can't willy nilly go the the London Metal Exchange in 2020 and buy 11k metric tonnes of cobalt per month. That would cause grotesque bidding wars with battery rivals, jet engine makers etc.

All the battery makers are expected to become more cobalt efficient over time, maybe eliminating cobalt in their chemistries in due course.

But you can't bank on that for 2018-2025 BEV production.

NCA is about 200 mAh/g, that's about 7 kWh/kg Co.
GF1 original plan was 35 GWh, thats about 5 kT Co, seems your numbers waaaaaaaaaaaaaaaaaaaaaaay off

 

[RobStark]

NCA is about 200 mAh/g, that's about 7 kWh/kg Co.
GF1 original plan was 35 GWh, thats about 5 kT Co, seems your numbers waaaaaaaaaaaaaaaaaaaaaaay off

At full capacity GF1 will be producing 105 GWh at cell level and 150 GWh of packs with Japan imports.

My estimate for Cobalt needed per car is based on what the miners are saying is needed.

If all that was needed was 5k metric tons per 35 GWh then Tesla would have no need to sign long term contracts with mining companies.

The miners say 8-12 kg of cobalt per car, depending on the size of the battery/range of the car.

 

[transpondster]

10 kg per car with 500000 cars are 5 kt, and is 4% of 2016 production according to your data. Let's not forget not only Tesla is increasing production and is happening in short time.

 

[RobStark]

At full capacity GF1 will be producing 105 GWh at cell level and 150 GWh of packs with Japan imports.

My estimate for Cobalt needed per car is based on what the miners are saying is needed.

If all that was needed was 5k metric tons per 35 GWh then Tesla would have no need to sign long term contracts with mining companies.

10 kg per car with 500000 cars are 5 kt, and is 4% of 2016 production according to your data. Let's not forget not only Tesla is increasing production and is happening in short time.

I figured 1M cars in 2020. New target is enough batteries for 900k-1M cars in 2020.

And Tesla having longest ranges 12 kg.

I figured 120k metric tons.

I was off by an order of magnitude.

ok 12k metric tons.

 

[jhm]

Top Mining Firm: 2017 Is “Tipping Point” For EVs

Dr Copper

 

[eisa01]

Exclusive: VW moves to secure cobalt supplies in shift to electric cars

As pointed out in the thread, the miners were not too happy about the tender conditions:
Subscribe to read

An attempt by one of the world’s biggest carmakers to secure long-term supplies of cobalt for its push into electric vehicles has been shunned by leading producers of the metal.
...
“They’re being arrogant because they’re automotive and they’re used to doing it,” one trader said. “They completely misjudged the contents of the tender. There’s no point negotiating — it’s not even a discussion point.”

 

[jhm]

LME Revs Up for Electric Cars With New Contracts for Battery Metals

Cobalt is going to get a futures market. Not sure how it will deal with ethical sourcing though.

 

[aubreymcfato]

LME Revs Up for Electric Cars With New Contracts for Battery Metals

Cobalt is going to get a futures market. Not sure how it will deal with ethical sourcing though.

Do you have suggestions for ethical ETF or stocks, regarding litium and Cobalt?
I bought eCobalt and Global Lithium ETF, they seemed more concerned than others to ethical sourcing (North America mines, in my mind, are better than African ones, for example).

 

[RobStark]

Electric cars set world's nickel miners on new course

UBS estimates that 15 million electric vehicles will be on the road by 2025, lifting nickel demand by 300,000-900,000 tonnes, or by 10-40 percent of the current market.

 

[RobStark]

Do you have suggestions for ethical ETF or stocks, regarding litium and Cobalt?
I bought eCobalt and Global Lithium ETF, they seemed more concerned than others to ethical sourcing (North America mines, in my mind, are better than African ones, for example).

Where is unethical lithium being sourced?