By Melanie Burton and Nicole Mordant
Mine developers say interest from Japanese and Korean firmsis particularly strong as they compete with rivals from
The central African country accounts for nearly two-thirdsof global cobalt output and production is set to rise despiteconcerns over the use of child miners and rising royalties.
"We are starting to see the first signs of an arms race tosecure long term cobalt supplies," said Joe Kaderavek, chiefexecutive of
"With over 85 percent of new global cobalt supply over thenext decade coming from
South Korean battery maker SK Innovation Co Ltdlocked in a seven-year supply deal with Australian Mineslast month, helping to win funding for a project thathas yet to make a final investment decision and does not expectto produce any cobalt until at least 2020.
At least half a dozen Australian and Canadian minedevelopers are currently in talks on potential supply deals withbattery and automakers for production at some point beyond late2019-2021, company executives told Reuters.
These include
"We are speaking to a number of parties about the balance ofthe offtake - that includes not just Chinese potential customersbut also customers from other parts of the world," Clean Teq'sCEO Sam Riggall told Reuters.
In an indication of heightened demand, Riggall saidautomotive companies were also showing interest, along withcathode manufacturers, the direct users of cobalt, a keymaterial in lithium-ion batteries.
DRC GROWTH
In the DRC, production is set to rise sharply, driven bycommodity giant Glencore Plc, the world's biggestproducer, and Luxembourg's ERG, taking DRC's share of globaloutput to over 75 percent by 2023, according to
Glencore last week agreed to sell around a third of itscobalt production over the next three years to Chinese batteryrecycler GEM Co Ltd.
Developments in
Fortune Minerals said it has signed 25 confidentialityagreements, while
"Certainly some of the groups that we have spoken to havesaid that they won't look at DRC sources, they want cleanethical sources of cobalt," said Ardea Managing Director MatthewPainter.
"Regarding concerns about procuring cobalt and other rawmaterials, we are addressing this by establishing advanceprocurement contracts and developing new procurement routes,"the company said in emailed comments.
RISKS REMAIN
Despite surging share prices for some cobalt developers,analysts warn the projects are not without risk, given fickletechnology and the high cost of processing out contaminants likearsenic, found in some North American operations.
Clean Teq shares more than doubled in the second half lastyear, but have since slipped 20 percent, partly because it hastwice delayed the date of its definitive feasibility study, saidLarry Hill, an analyst with Canaccord Genuity in
Still, the company easily raised
"There's still a lot of upside in any cobalt supply that isex-DRC," said James Eginton, an investment analyst with
"The challenges of the DRC make anything that comes out ofanywhere else a lot more attractive."
(
(Reporting by Melanie Burton in