Chinese battery materials producer GEM has signed an eight-year nickel and cobalt supply contract with Indonesia's Halamahera Persada Lygend (HPAL), starting from 2021.
This procurement scheme, seen by Fastmarkets, specifies eight-year totals for battery-grade nickel and cobalt raw materials, with nickel content totaling no less than 74,400 tonnes and no more than 178,560 tonnes and cobalt content at a minimum of 9,296 tonnes and no more than 22,320 tonnes.
The per-year breakdown for nickel amounts to 9,300-22,320 tonnes (nickel contained), while the annual total for cobalt by-products is 1,162- 2,790 tonnes (cobalt contained).
“With the booming of global [electric vehicle, or EV] market, high-nickel and low-cobalt batteries will become the trend... [This] agreement will help us secure nickel raw materials to meet our growing [needs],” GEM said in a filing to Shenzhen Stock Exchange on September 2.
HPAL - a joint venture between China's Ningbo Lygend Resources & Technology Co and Indonesia's Harita Group - has a planned annual output of 240,000 tonnes of nickel sulfate and 30,000 tonnes of cobalt sulfate products in Indonesia.
The EV boom has sparked growing investor optimism for more nickel consumption and, in July, the United States EV producer Tesla’s chief executive officer, Elon Musk, called for a ramp-up in global nickel mining to match his company’s production ambitions.
In China, the V-shaped economic recovery from the Covid-19 outbreak has seen a strong rebound in the automobile market.
The country produced 100,000 units of new energy vehicles (NEVs) in July, up 15.6% year on year, and sold 98,000 NEVs - a 19.3% year-on-year increase, according to the China Association of Automobile Manufacturers (CAAM).
China’s nickel sulfate price made positive response to high costs, demand recovery and low supplies, Fastmarkets learned.
Fastmarkets' price assessment for nickel sulfate min 21%, max 22.5%; cobalt 10ppm max, exw China, reached its highest level so far this year on August 28 at 26,000-26,500 yuan (3,801-3,874) per tonne.
The nickel sulfate price began to rise in mid-late July and gained 4.4% in August alone, rising from 24,800-25,500 yuan per tonne on August 7.
“The price will increase further with the strengthening LME nickel [price] and low supplies, and I have heard a deal at 27,000 yuan per tonne already,” a trader source said.
In the cobalt sulfate market, the blue metal's price briefly reached a 2020 high of 290,000-300,000 yuan per tonne in the second week of August, supported by spot cobalt hydroxide supply tightness, a strong metal performance and a recovery in demand from late July.
But the market then tracked down with suppliers cutting their offers to attract business because consumers had been broadly resistant to previous price increases and were cautious about restocking.
High raw materials import costs are expected to limit the likelihood of any steep price drops in the near term, according to market participants.
Fastmarkets’ price assessment for cobalt 99.8% Co min, ex-works China fell to 272,000-281,000 yuan per tonne (equivalent to about $15.99-16.52 per lb) on September 2, down 1.3% from 275,000-285,000 yuan per tonne on August 28.