Glencore Plc, the world’s biggest supplier of cobalt, has extended its supply agreement with battery maker GEM Co., allowing the Chinese company to secure supply of the crucial metal until the end of the decade.
The deal ensures GEM will have a steady supply of the battery-making ingredient until at least 2029, and further strengthens China’s growing dominance of the industry. Glencore said Thursday that it will sell 150,000 tonnes of cobalt between 2020 and 2029. It replaces a previous agreement to sell about 60,000 tonnes through 2024.
The deal comes as cobalt starts to recover following a collapse in 2019 as too much new supply was brought into production. Glencore took steps to support prices by reducing supply. Last year it shuttered its Mutanda copper and cobalt project in the Democratic Republic of Congo, helping to put a floor under the market.
While there’s enough cobalt supply for now, demand is expected to surge in the coming years and automakers have grown increasingly concerned about getting access to enough of the material. Almost three-quarters of the world’s cobalt comes from Congo.
“Despite the covid-19 pandemic in 2020, the adoption of new energy vehicles is accelerating, and there is no doubt that they are revolutionizing the world’s automobile industry,” GEM Chairman Xu Kaihua said in a statement. “As a result, cobalt, as one of the key raw materials for EV batteries, will become a global strategic resource of extreme importance.”
Tesla earlier this year struck a deal with Glencore to buy cobalt from its Congo mines, while BMW AG has also locked in some supply.
GEM and Glencore had a supply deal that ran from 2018 to 2020, but when cobalt prices started plunging, the Chinese company halted purchases, a person familiar with the matter said at the time.
(By Thomas Biesheuvel)