Renewables/GOES MMI: Tesla in talks to use cobalt-free batteries

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Tesla’s Model 3. Source: Tesla

The Renewables Monthly Metals Index (MMI) dropped one point for a March MMI reading of 97. (Editor’s Note: This report also includes coverage of grain-oriented electrical steel.)

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Tesla looks into cobalt-free batteries

As noted by MetalMiner’s Stuart Burns, cobalt costs have many manufacturers looking for substitutes.

For electric vehicle (EV) makers like Tesla, that means using batteries in which other materials are substituted for cobalt.

“Reuters recently reported on Tesla’s announcement that it is in advanced talks to use batteries from China’s Contemporary Amperex Technology Co Ltd (CATL) that contain no cobalt specifically for use in cars made at Tesla’s Shanghai plant,” Burns wrote.

“The statement went on to say as a result of using CATL’s lithium-iron-phosphate (LFP) batteries, Tesla would be able to substantially lower the cost of those cars using the alternative battery technology, as cobalt is the most expensive component in traditional nickel-cobalt-aluminum (NCA) and nickel-manganese-cobalt (NMC) batteries.

“The statement, however, did not say what the impact of the alternative batteries would be on range.”

Burns noted there has indeed been an increase in competition in the space, including from legacy automakers like General Motors and Ford.

“In the meantime, there will only be a sub-set of Tesla’s client base that is willing to compromise an already limited range for price, so most models will continue to use cobalt-containing battery chemistries,” Burns added.

“Particularly with what appears to be a very competitive Ford rival coming out this year in the all-electric Mustang EV that looks like it could give the Model 3 a run for its money, competition for a sector Tesla has dominated is heating up.

“As for the cobalt price, Tesla’s announcement may shake some investors, but the market is already in surplus. With Glencore’s Mutanda mine on care and maintenance for at least two years, there is something in excess of 20,000 tons of cobalt, our contacts tell us, ready to come back onstream should EV take-up really accelerate faster than anticipated and cause demand-driven price rises.”

Global cobalt mine production drops in 2019

The U.S. Geological Survey (USGS) recently released its Mineral Commodity Summaries 2020 report, reporting global mined cobalt production reached 140,000 tons in 2019, down from 148,000 tons in 2018.

The Democratic Republic of the Congo (DRC) continued to produce the majority of global production at 70%. DRC production last year hit 100,000 tons, down from 104,000 tons in 2018.

Russian production came in flat at 6,100 tons, while Australia’s production rose from 4,880 tons to 5,100 tons.

Regarding substitution, the USGS forecast cobalt’s use in lithium-ion batteries will decline.

“Depending on the application, substitution for cobalt could result in a loss in product performance or an increase in cost,” the USGS said. “The cobalt contents of lithium-ion batteries, the leading global use for cobalt, are expected to be reduced rather than eliminated; nickel contents of lithium-ion batteries will increase as cobalt contents decrease.

“Potential substitutes in other applications include barium or strontium ferrites, neodymium-iron-boron, or nickel-iron alloys in magnets; cerium, iron, lead, manganese, or vanadium in paints; cobalt-iron-copper or iron-copper in diamond tools; copper-iron-manganese for curing unsaturated polyester resins; iron, iron-cobalt-nickel, nickel, cermets, or ceramics in cutting and wear-resistant materials; nickel-based alloys or ceramics in jet engines; nickel in petroleum catalysts; rhodium in hydroformylation catalysts; and titanium-based alloys in prosthetics.”

In the U.S., production ticked up modestly from 490 tons in 2018 to 500 tons last year.

“In 2019, the nickel-copper Eagle Mine in Michigan produced cobalt-bearing nickel concentrate,” the USGS noted. “In Missouri, a company built a flotation plant and produced nickel-copper-cobalt concentrate from historic mine tailings. Most U.S. cobalt supply comprised imports and secondary (scrap) materials.”

GOES

The GOES MMI, which tracks grain-oriented electrical steel, dropped 22 points for a March reading of 161.

In electrical steel news, shareholders approved the planned acquisition by Cleveland-Cliffs of AK Steel (the latter being the lone U.S. producer of grain-oriented electrical steels).

“The shareholders of Cliffs and the stockholders of AK Steel have spoken, and delivered an outstanding victory in support of our transaction,” said Lourenco Goncalves, chairman, president and CEO of Cleveland-Cliffs. “I thank you all for your unequivocal demonstration of support. The new Cleveland-Cliffs is a lot stronger than either Cliffs or AK Steel individually. We are ready to transform your confidence into shareholder value, and that’s what we are going to do.”

The merger transaction is scheduled to close March 13.

Elsewhere, Goncalves reportedly asked President Donald Trump to expand tariffs to include electrical steels coming to the U.S. through Canada and Mexico, the Pittsburgh Post-Gazette reported.

According to Goncalves, without the tariffs he would likely have to close AK Steel’s Butler Works in Pennsylvania, where approximately 1,500 are employed.

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Actual metal prices and trends

The Japanese steel plate price rose 0.6% month over month to $817.01/mt as of March 1. The Korean steel plate price rose 0.4% to $537.34/mt. The Chinese steel plate price fell 2.0% to $593.59/mt.

The U.S. steel plate price fell 3.6% to $696/st.

The U.S. GOES price fell 12.3% to $2,216/mt.

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