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Buy mines and start mines, and the world is scrambling for rare metals
Update Time : 2019-02-28 View : 4661

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The competition for rare metals such as cobalt and nickel is becoming increasingly fierce, Nikkei China Net reported. Rare metals are essential materials for pure electric vehicles (EV) and renewable energy batteries, but supply risks and market fluctuations are evident due to the offensive of Chinese enterprises. Consumer-friendly businesses such as Softbank Group of Japan (SBG) and BMW of Germany are approaching upstream mining operations. In addition, non-ferrous metal enterprises are also competing for technological innovation in recycling and utilization to support the new industry in the era of "de-petroleum".
Crossing mountains and lakes from Quebec in eastern Canada, more than 800 kilometres ahead is a lithium mine called Whabouchi. In order to start production in the second half of 2020, Softbank Group is paying close attention to mine preparation. This is Softbank Group's first mine investment project. Whabouchi expects lithium production to reach 33,000 tons a year, and Softbank Group will purchase up to 20% of its annual production directly in the long run.
The company invested about 8 billion yen in 2018 and acquired a 9.9% stake in Nemasca Lithium, a mining operator. First, lithium for solar batteries will be supplied to Soft Silver Group from a new smelter in the suburbs of Quebec.
"We will become an industry enterprise in the mining industry, overlooking the market. Buying in large quantities can be preferred to reduce the risk of purchasing, "Maoji Sanlun, head of the Softbank Group CEO's project office, explained the intention to invest. He said energetically, "We will discuss continuing investment in technology and metals projects (combining advanced technology and resources)."
Buffett is also concerned.
Among IT companies, there are reports that Apple (170.41, 0.20, 0.12%) is negotiating with mining companies to purchase cobalt directly. The Financial Times (FT) reported that Berkshire Hathaway, an investment company led by Warren Buffett, a well-known investor, also showed interest in lithium supply for pure electric vehicles.
BMW has taken action against the backdrop that German auto giants such as Volkswagen and Daimler will also start direct purchases.
BMW, Samsung Electronics Group of Korea and BASF of Germany, which are involved in electrodes business, have begun plans to improve the working environment of mines in the Democratic Republic of the Congo. Congo is the largest cobalt producer with nearly 60% of the world's cobalt production.
BMW says 15 to 20 percent of Congo's cobalt production is mined by hand, with some jobs alleged to have problems with child labor and health management. By improving the business environment, including the surrounding communities, it will not only benefit in terms of quantity and price of procurement, but also reduce the reputation risk of "ESG (environmental, social and corporate governance) investment". Its intention is to stabilize the procurement of the country's resources.
Behind the convergence of growth industries towards rare metal mine projects, there is a risk that the supply of battery materials will not meet the demand.
Especially cobalt, Congo accounted for 58% of the world's annual output in 2017, and its output was too concentrated. According to Bloomberg New Energy Finance, demand for cobalt is expected to exceed supply by the first half of 2020. Prices also rose from around $10 a pound in 2016 to over $40 a year in 2018. Now it's down to about $20, but it's volatile.
Cobalt is mostly a by-product of copper and nickel, but cobalt may not be obtained from these minerals. In addition, the demand for nickel as electrode material for lithium ion batteries is also expanding, but only in Indonesia and the Philippines. Market participants believe that "the possibility of further price increases is very high".
China's offensive exacerbates risks
To further aggravate the risk of shortage of supply and demand, Chinese enterprises are pushing forward the offensive of rare metal industry in resource-based countries.
On January 11, in Sulawesi, Indonesia, a joint nickel and cobalt compound factory opened by three Chinese companies was inaugurated. The company's management and Indonesia's main economic cabinet were all present. The factory can produce high-purity nickel and cobalt compounds in one stop, the largest scale in the world.
Invested by Qingshan Group, Ningde Age New Energy Technology (CATL), a nickel-based battery manufacturer, and Greenmay (GEM), a battery recycling industry, it will be put into production in April 2020 and plans to supply on-board batteries. Total investment amounted to $700 million. Castle Peak is closely related to local state-owned enterprises in stainless steel field, and in line with the government's intention to promote industrial upgrading, it will purchase ore steadily.
In addition, Chinese enterprises are dominant in Congo. Data from the Nickel Industry Association show that Chinese enterprises control more than 80% of Congo's cobalt resources, that is to say, nearly half of the world's cobalt resources are owned by Chinese enterprises.
Urban Mines in Japan
The world's large enterprises invest in mines globally with strong financial strength. Japan's non-ferrous metals companies, which have previously been involved in rare metals business, will use metal processing technology to open up "urban mines"

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