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Glencore said it will double its production of cobalt over the next three years as it confirmed it was in talks with Tesla, Apple and Volkswagen on supply of the battery metal.
The miner and trader said it aims to produce around 63,000 tonnes of cobalt by 2020 from its current 27,000 tonnes following the restart of its Katanga copper operations in the Democratic Republic of Congo.
Glencore’s target of 63,000 tonnes would be worth around $4.7bn at current cobalt prices.
Cobalt prices have jumped over 120 per cent year-to-date on a sudden increase in demand from electric vehicle manufacturers. Investors have also stockpiled thousands of tonnes of the metal in the hope of profiting from higher prices.
Carmakers such as Volkswagen are looking to secure supplies of the metal as they execute on ambitious plans for electric car and battery production. In September VW put out a tender seeking five years of cobalt supply, which was initially rebuffed by miners.
In 2015 Glencore shut its Katanga copper and cobalt mine in the DRC’s Lualaba province to construct a new processing facility. That’s been successfully completed and will reach full capacity in the first quarter of 2018, Katanga said on Monday.
Ivan Glasenberg, Glencore chief executive, said he didn’t believe the world could produce enough cobalt to satisfy long-term electric vehicle demand given current projections.
“Scientists will have to find an alternative — it won’t be a matter of pricing,” he said. “It’s a matter of will the cobalt be available.”
If Glencore brings that supply to the market, that could result in a surplus in 2019, according to George Heppel, an analyst at CRU. Glencore could instead build up inventories of the metal, he said.
“Ultimately Glencore is not going to put it all into the market, they are not averse to quietly building up stocks and inventories,” he said.