Glencore Lands Six-Year Deal To Supply Cobalt for EV Batteries

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--British-Swiss mining and commodities giant Glencore has signed a major deal to supply up to 30,000 tonnes of cobalt [contained in hydroxide] to electric vehicle (EV) battery maker SK Innovation.

The six-year deal, running from 2020 to 2025, will allow SK Innovation to make roughly 3 million battery packs. SK Innovation is one of the leading makers of EV battery packs, supplying car brands including Volkswagen, Daimler, Kia Motors, Jaguar Land Rover and Ferrari. Industrial Info is tracking the company's plans to build a $1.67 billion battery plant in Commerce, Georgia. Groundbreaking kicked off earlier this year, and the plant will be completed in the second half of 2021, with production commencing in early 2022. On completion, the plant will be capable of producing enough batteries to power 250,000 electric vehicles per year. It also aims to invest a further 750 million euros ($859 million) to build a second battery plant in Hungary. Construction started last March on the first plant. The plant currently under construction will have a production capacity of 7.5 gigawatt-hours (GWh) when completed late this year, with the production lines due to start rolling in 2020. For additional information, see October, 2019, article - SK Innovation To Build Second EV Battery Plant in Hungary.

"In signing this contract with the world's largest producer of cobalt, SK Innovation has secured supply of a metal which is both core to battery production and in short supply," the South Korean company stated. "SK Innovation stands ready to produce the batteries required to meet the significant anticipated battery demand. The electric vehicle battery market is growing fast and the total market size will be $150 billion in 2025, larger than the semiconductor market. Accordingly, cobalt demand will keep increasing. We assume global cobalt demand for EV batteries will be 32 kilotonnes (kt) in 2020 and 92 kt in 2025. With this contract, SK Innovation can produce batteries for 3 million EVs."

Nico Paraskevas, head of copper & cobalt marketing at Glencore, commented: "This newly established partnership demonstrates the continuation of Glencore's cobalt hydroxide marketing strategy to secure long-term supply agreements with key players in the lithium-ion battery supply chain. This illustrates Glencore's important role in supplying the materials that enable the energy and mobility transition and Glencore's commitment to responsible production."

In related news, Glencore has confirmed that it is being investigated by the U.K.'s Serious Fraud Office (SFO) over suspicions of bribery.

The investigation follows media reports in May about Glencore's dealings with the former leader of the Democratic Republic of Congo (DRC) Joseph Kaliba and Israeli billionaire Dan Gertler. The SFO stated: "The Serious Fraud Office is investigating suspicions of bribery in the conduct of business by the Glencore group of companies, its officials, employees, agents and associated persons."

Glencore confirmed the investigation and its intent to fully cooperate but made no further comment. The company's share price dropped 9% to a three-year low on the London Stock Exchange. Glencore is the world's largest commodities trading company as well as operating around 150 mines, metallurgical sites and oil production assets.

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