Glencore, a commodity trading and mining company, announced a huge supply deal with SK Innovation, which intends to purchase up to 30,000 tonnes of cobalt (contained in hydroxide) for lithium-ion batteries over six years (2020-2025).
According to SK Innovation, such volume of cobalt (one of the key elements of lithium-ion cathodes) might be enough to produce batteries for some 3 million electric cars.
SK Innovation expects also that global demand for cobalt for EV batteries will increase to 32 tonnes in 2020 and 92,000 tonnes in 2025.
Comparing the provided numbers, some 10 kg of cobalt will be used in a single electric car.
If we assume an average of 50 kWh battery per EV, SK Innovation is gearing up to produce roughly 150 GWh of batteries between 2020 and 2025, using cobalt from the latest deal. The exact number depends on the average battery capacity and cobalt content.
Battery manufacturers are trying to reduce cobalt content to less than 10% of the cathode (through new chemistries like for example NCM 811).
SK Innovation commented:
“In signing this contract with the world’s largest producer of cobalt, SK Innovation has secured supply of a metal which is both core to battery production and in short supply. SK Innovation stands ready to produce the batteries required to meet the significant anticipated battery demand.
The electric vehicle (EV) battery market is growing fast and the total market size will be c.US$150bn in 2025, larger than the semiconductor market. Accordingly, cobalt demand will keep increasing. We assume global cobalt demand for EV batteries will be 32kt in 2020 and 92kt in 2025. With this contract, SK Innovation can produce batteries for 3 million EVs.
Glencore and SK Innovation are committed to ensuring ethical and responsible production and procurement of cobalt. There are continuous allegations of human rights abuses linked to cobalt production, and SK Innovation is voluntarily focusing on ethical and responsible sourcing. The cobalt in this supply contract will be sourced from Glencore’s industrial mining operations located in the DRC. Both parties agree that the DRC operations will be independently audited each year against the “Cobalt Refinery Supply Chain Due Diligence Standard”. This standard is defined by the Responsible Mining Initiative.
Amid growing battery demand, SK Innovation will do its utmost to ensure stable raw material supply while fulfilling its ethical responsibilities.”
Nico Paraskevas, Head of Copper & Cobalt Marketing, Glencore, commented:
“We are pleased to enter into this long-term cobalt supply agreement with SK Innovation.
This newly established partnership demonstrates the continuation of Glencore’s cobalt hydroxide marketing strategy to secure long term supply agreements with key players in the lithium-ion battery supply chain. This illustrates Glencore’s important role in supplying the materials that enable the energy and mobility transition and Glencore’s commitment to responsible production.”