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Glencore signs massive cobalt sale deal with China's GEM

15th March 2018

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Glencore, the world's biggest producer of cobalt, has agreed to sell around a third of its cobalt production over the next three years to Chinese battery recycler GEM Co, according to a filing by GEM on Wednesday.

Glencore will sell 52 800 t of cobalt hydroxide to GEM between 2018 and 2020 as demand for cobalt, a critical metal in lithium-ion batteries, soars on a forecasted boom in electric vehicle sales.

Reuters reported last week that Glencore was in talks to sell around a quarter of its cobalt output in a one-year deal to GEM, according to sources. Price was a sticking point as the Swiss-based global miner and other major producers are now able to exert more influence in negotiations.

Expectations of supply shortages have fueled a cobalt rally that has taken prices to around $39/lb, from near $10/lb in January 2016 and to their highest level since July 2008, before the financial crisis started.

According to the filing, GEM and its subsidiaries will purchase 13 800 t of cobalt hydroxide from Glencore in 2018. They will buy 18 000 t in 2019 and 21 000 t in 2020.

Glencore, whose cobalt is mined as a byproduct from its copper and nickel mines in the Democratic Republic of Congo, Canada and Australia, expects to produce around 39 000 t of cobalt in 2018 - equal to about 35% of estimated global production.

Glencore expects its cobalt production to rise to 65 000 t in 2019 and dip to 63 000 t in 2020.

Edited by Reuters

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