Electric vehicles received a vote of confidence earlier this week when the London Electric Vehicle Company (LEVC) said taxi operators in the City had saved £3.5m in fuel costs since it rolled out its electric cab last year.
The LEVC, which is a wholly-owned subsidiary of Geely Motors, has sold 2,500 of its taxis to date, with 2,000 operating in London and the rest spanning the remainder of the UK. The firm claims that the vehicles have collectively prevented 6,800ts of carbon dioxide from entering the atmosphere, according to trade paper Business Green, as well as saving around 850,000 litres of diesel fuel.
This latest display of the economic and environmental benefits of EVs adds to an existing arsenal of evidence supporting the gradual uptake of the vehicles across the world. The world’s fleet of EVs grew by 54pc to about 3.1m in 2017 and is expected to hit 125m by 2030, according to the IEA. Likewise, JP Morgan forecasts that EVs will account for 30pc of all global vehicle sales 2025 – this compares to 1pc in 2016.
The majority of these EVs are expected to use different variations of what are known as Li-ion batteries, formed from the combination of lithium compounds with other materials. Among these other materials is cobalt, which is contained within around three-quarters of cells. As such, the market for the metal is expected to double over the next four years alone and quadruple by 2028. To express this another way, 62pc of global cobalt demand is likely to come from battery manufacturers by 2020, up from 51pc in 2016 and 20pc in 2006.
Despite the continuation of this long-term trend, cobalt prices have slumped recently, with the metal losing around 70pc of its value since March 2018. The metal currently sits at c.$26,000/t. This has been driven by numerous factors, including a slightly slower-than-expected uptake of EVs, a rush to mine as much cobalt as possible, and a change in subsidies in China - responsible for half of global EV sales.
However, the price has arguably been most depressed by a large amount of new supply coming online from the DRC, a politically unstable nation whose mining sector is fraught with human rights issues. The cobalt market’s current reliance on the country for supply became clear in November when prices soared after Glencore abruptly halted sales of the metal from the country after discovering uranium at its key mine.
These supply constraints were highlighted once again earlier this year by British scientists who warned that if EVs replace the UK’s 31.5m cars by 2050, as per government plans, it will require twice the current annual global cobalt supply alone. In a letter to the country’s Committee on Climate Change, the team of scientists said replacing the vehicles will require 207,900ts of cobalt as well as 264,600ts of lithium carbonate and 2,362,500s of copper.
Many believe that cobalt’s bear-run could soon come to an end. For example, a recent report from FocusEconomics suggests that cobalt prices will hit $40,000 by mid-2020, before adding another $10,000 in 2021. As International Banker highlights, this bullish sentiment is being put down to a boost in global EV sales volumes.
Likewise, Roskill Information Services adds: ‘With demand across most major end-use applications set to increase, and with demand from the battery sector expected to enjoy double-digit growth over the coming decade, the market is gearing itself up for a sustained period of unprecedented consumption growth.’
Should EV uptake and cobalt demand continue to increase and supply constraints become more apparent, then it will be of significant benefit to businesses with exposure to the metal in nations other than the DRC.
One such example is Global Energy Metals (TSX-V:GEMC), which is currently preparing to build upon its strong UK shareholder base by co-listing in London. The firm is developing a diversified global portfolio of cobalt assets, including project stakes, projects and other supply sources.
The business’s flagship asset is the Millennium Project in the world-renowned Mt. Isa region of Queensland, Australia. Global Energy recently revealed plans to take the project forward alongside Australian peer Cobalt Blue Holdings.
Millennium is a multi-zone, near-surface cobalt-copper sulphide system with several kilometres of potential strike length. It is located near established mining, transport, and processing infrastructure and offers easy access to a very skilled workforce.
The growth-stage site contains a defined zone of cobalt-copper mineralisation. Here, a 2016 JORC Resource estimate identified 3.1MMts of inferred resources containing 0.14pc cobalt and 0.34pc copper with gold credits. Global Energy is now looking at ways to increase the size of its deposit. Results from a first phase exploration campaign at two zones called Millennium North and Millennium South exceeded grade and thickness expectations. The firm will now carry out a second phase of drilling to examine both areas further.
Alongside Millennium, Global Energy has acquired two further discovery sites called Mt. Dorothy and Cobalt Ridge. These are collectively known as the ‘Mt. Isa projects’. The areas expand Global Energy’s Australian land position by nearly twenty times but have yet to be exploited. Exploration to date has returned high-grade cobalt intercepts at both, allowing Global Energy to line up numerous targets for further investigation and test work to define a resource.
The firm is also developing two Nevada-based battery metal sites called the Lovelock Cobalt Mine and the Treasure Box Project. These are located just 150km east of Tesla’s Gigafactory. Finally, the business currently owns 70pc of the Werner Lake cobalt mine in Ontario Canada.
Author: Daniel Flynn
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