ERG says cobalt market can only benefit from EU’s green plan

MINEX Forum | June 3, 2020 | Views: 46 | Source: Mining Weekly

Diversified miner Eurasian Resources Group (ERG) says the European Union’s (EU’s) green plan to make electric vehicles (EVs) a centrepiece of the continent’s economic recovery has injected confidence into the global cobalt market.

CEO Benedikt Sobotka says the green plan has also renewed momentum for responsible sourcing across the supply chain.

He notes that, if commitments to remove artisanal mining from value chains are widely embraced across the industry in the coming months, the cobalt market would rapidly move into deficit.

“While there are reports of significant stock build of artisanal cobalt concentrate in both the Democratic Republic of Congo and Zambia, there is no clear exit strategy for the owners of this material.

“Market sentiment has improved considerably and the industry is also increasingly seeing cobalt consumers and original-equipment manufacturers, globally, taking steps to ensure that they deal with clean cobalt, produced under circumstances which do not contravene internal procurement policies or international law,” Sobotka highlights.

He adds that recent government and industry association initiatives across the EU many also provide the boost required to put a floor to cobalt prices.

The cobalt market further stands to benefit from Europe’s continuous transformation into a global battery powerhouse.

Automakers will be expected by European governments to make corresponding investments in European battery materials and cell manufacturing, while the EU is also seeking to double investments to overcome the battery charging infrastructure gap.

“When the European Green Cars Initiative was introduced, as part of the European Economic Recovery Plan, in the aftermath of the global financial crisis, it was too early for a wholesale push into EVs due to technological, financial and regulatory constraints and limited consumer appetite.

“In 2020, the technological hurdles are significantly diminished and EVs have become popularised in no small part due to Tesla and the attendant markets for key battery metals including cobalt,” Sobotka says.

He adds that the timing is perfect, with European automakers having geared up to launch EVs and are in a position to benefit from supportive policies..

For example, on June 1, France introduced increased subsidies for EVs. The subsidy paid to any individual purchaser of a 100% EV increases from €6 000 to €7 000, and professional fleets (which made up more than 50% of the domestic market in 2019) will benefit from incentives going up from €3 000 to €5 000.

Sobotka points out that there is also a conversion bonus for people who want to scrap old vehicles in favour of a new purchase, and that bonus is higher if the individual chooses an EV over an internal combustion engine vehicle.

Meanwhile, EV sales in Europe are reaching record levels in terms of penetration rates. While internal combustion vehicle sales slumped so far this year, EV sales have performed better than ever, Sobotka notes.

About 172 000 battery and plug-in hybrid EVs were sold across Europe from January to April 2019.

Over the same period this year, EV sales reached 269 000 units, indicating year-on-year growth of 56%.

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