Fortune Minerals : COBALT NEWS

Financial Times - February 4, 2021

While the world was locked down by coronavirus last year, Andrew 'Twiggy' Forrest, chairman of Fortescue Metals Group, was on the move. The ...

'As we go from carbon [fossil fuels] to electrons, we will have a world order where the electron is more important than the carbon.'... Pascal Lamy, former head of the World Trade Organization, compares the global shift from one energy system to another with the advent of the industrial revolution. 'There is an inflection taking place,'…'If you compare the world today to the world 18 months ago, the big difference is that . . . only 25 per cent of the world had a decarbonisation horizon. Today, 75 per cent of the world economy has a decarbonisation horizon. This is a major shift.'…The coronavirus pandemic has accelerated the trend... 'Our numbers show that renewables are set to become the largest source of generation by 2025, overtaking coal - and ending the fossil-fuel domination of the last decades.'... In a statement that would have once been unthinkable, BP recently said peak oil may have already occurred in 2019.Ben van Beurden, Shell's chief executive, says electricity will become a mainstay of its business…The Irena report found three ways for countries to exert influence in the new system. One is by exporting electricity or green fuels. Another is by controlling the raw materials used in clean energy, such as lithium and cobalt. The third is by gaining an edge in technology, such as electric vehicle batteries…'We have one country in pole position,' he says. 'China.' The southern tip of the Democratic Republic of Congo is famous for the Tenke Fungurume copper and cobalt mine. The ore is so rich that in some places it can be dug up by hand - enterprising locals look out for the pale-purple 'copper flower' that signals the presence of the mineral below. Huge trucks travel at high speed along the narrow paved road that leads to the mine, carrying ore, equipment or acid used to process the minerals. And along the sides of the road, a foreign script is visible on storefronts and signs - Chinese. The area has long been the subject of power disputes, but China's arrival is recent. China Molybdenum, which is listed in Hong Kong and Shanghai, bought the mine from Freeport-McMoran, the US copper giant, for $2.65bn in 2016. Initially, it looked as if China's bet was struggling: copper and cobalt prices fell, and disputes with local suppliers caused the mine to lag behind in production.But today, as demand for copper and cobalt soars due to the clean energy transition, it seems like a masterstroke. Copper is essential for electric cables and wind turbines, and cobalt is used in electric vehicle batteries. China Molybdenum now controls more than one-tenth of the world's cobalt. Tenke Fungurume is an 'absolutely great asset', says copper analyst George Heppel of business intelligence company CRU. 'I don't think there's anything quite like that size, in terms of gigantic deposits.'The purchase is just one in a series of moves that have put Chinese groups ahead in almost every area of clean tech. China produces more than 70 per cent of all solar photovoltaic panels, half of the world's electric vehicles and a third of its wind power. It is also the biggest battery producer and controls many of the raw materials crucial for clean-tech supply chains, such as cobalt, rare earth minerals and polysilicon, a key ingredient in solar panels…'If you talk about the clean energy technology race, in many ways, it looks as if the race has already been run, and the winner is China,' says Van de Graaf. 'Other players are trying to catch up.' The US, for example, has limited domestic supplies of cobalt and lithium, and the state department has for the past few years tried to improve access to rare earth minerals, due to their strategic importance…As major economies work to reach their net-zero goals, they will have to buy more solar panels, batteries and critical minerals. The main supplier? China… Beijing dominates the supply chain from the mines in the DRC to the final production of lithium-ion batteries. Its companies control more than 85 per cent of the world's refined cobalt chemical capacity, essential for most lithium-ion batteries. It also mines almost all of the world's rare earth minerals, which are used in electric motors and wind turbines. Making an electric vehicle without involving China is almost impossible…Steven Chu, former US energy secretary, says that it is 'absolutely' a concern for the US to rely on Chinese supply chains for its energy transition. 'For strategic reasons, you don't want to be beholden to a single country supplier,' he says, drawing an analogy to China's dominance in making masks and other personal protective equipment during the coronavirus pandemic… Other global leaders face a similar quandary: as they invest more in the energy transition, some of that money will filter back to China.