TELF AG examines Strategic Metals and Battery Materials Update – May 27 2023
Recent developments
The base metals and battery materials market witnessed various developments recently, with notable updates in the cobalt and nickel sectors. While cobalt prices remained stable, sulfate prices experienced a rise due to increased purchasing activity. On the other hand, the nickel sulfate spot market remained illiquid, and prices remained steady. Additionally, the G7 nations expressed their commitment to reducing Russia’s revenue from metals to limit their ability to finance the ongoing conflict in Ukraine. Let’s delve deeper into these updates and their potential implications.
Cobalt Market:
The cobalt market showed signs of stability, as no significant shifts were observed in metal prices. However, sulfate prices saw an increase, driven by heightened purchasing activity. On the other hand, the auto market’s recovery remained sluggish, starkly contrasting with the growing demand for consumer electronics.
Cobalt Supply:
CMOC and Gécamines agreed on royalties in April, resolving a longstanding dispute over Tenke Fungurume in the Democratic Republic of Congo (DRC). This resolution is a significant step forward, as an export ban led to a substantial buildup of copper cathode and cobalt at the mine site. However, releasing this material quickly into the market may prove challenging due to logistical issues and delays associated with transport in central Africa.
Furthermore, Jervois Global announced the suspension of final construction and full concentrator commissioning at its Idaho Cobalt Operations (ICO) in the USA. The decision was driven by persistently low cobalt prices and the inflationary impact on construction costs. ICO represents the largest and highest-grade cobalt orebody in the USA, and its suspension highlights the need for higher cobalt prices in the medium term to support increased raw material requirements for the energy transition and Western ESG-focused cobalt sources.
Nickel Market:
The nickel sulfate spot market experienced limited liquidity, and prices remained unchanged. Unlike the lithium market, which has witnessed rapid price increases despite limited spot demand, nickel sulfate prices did not follow a similar pattern. Market participants reported that deals primarily revolved around long-term contracts, with less speculative activity than lithium.
G7 Nations’ Pledge to Reduce Russia’s Metal Revenue:
During the G7 summit in Hiroshima, Japan, the leaders of the world’s wealthiest nations pledged to continue efforts to reduce Russia’s revenue from metals. This statement is part of their commitment to restrict Russia’s income and its ability to finance the conflict in Ukraine. The UK, for instance, announced a ban on imports of Russian metals, including aluminum, nickel, and copper. Igor Altushkin, the Russian Copper Company (RCC) owner, was among the individuals added to the British sanctions list and eight companies connected to metals production in Russia. These measures are intended to increase pressure on Russia’s metal industry, which serves as a significant revenue stream for the Kremlin’s war machine, and have broader implications for sectors such as transport and energy.
Conclusion:
The base metals and battery materials market experienced mixed dynamics in recent weeks. While cobalt prices remained stable, sulfate prices rose due to increased purchasing activity. The nickel sulfate spot market remained illiquid with steady prices. The G7 nations’ commitment to reducing Russia’s metal revenue signifies a concerted effort to limit its ability to finance the ongoing conflict in Ukraine. These developments highlight the interconnectedness of geopolitics and the base metals market and may have lasting implications for industry stakeholders and investors.
