Apple to Accumulate Cobalt for Battery Manufacturing Applications

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【Summary】Automotive companies with large supplies of the mineral can streamline production, as well as reduce risks related to shortage and trapped inventory.

Michael Cheng    Apr 06, 2018 12:45 PM PT
Apple to Accumulate Cobalt for Battery Manufacturing Applications

Precious and industrial metals, specifically copper, nickel and cobalt (just to name a few), are crucial components in large-scale battery manufacturing. Such products underpin the tech sector's shift to wireless, battery-powered products, including smart phones and EVs.

Focusing on cobalt, companies with large supplies of the mineral can streamline production, as well as reduce risks related to shortage and trapped inventory. This is likely the reason why tech giant Apple is reportedly in the process of accumulating cobalt.

The raw material is heavily utilized in a range of Apple products, from laptops to mp3 players. From a regulatory perspective, going directly to cobalt miners for supply may improve compliance.

The leading smartphone designer is known for actively monitoring and auditing its suppliers, due to the exploitation of child labor by mining businesses (based on a report by Amnesty International). Microsoft, Sony and Samsung were also cited by the firm.

Securing Cobalt Contracts

Apple's interest in acquiring massive orders of cobalt over a five-year period is a very competitive move. Bloomberg analysts confirmed the company is currently in talks with various cobalt miners, without any verification of finalized agreements.

Car manufacturers, such as BMW (seeking a 10-year deal) and Volkswagen, are also racing to partner with cobalt suppliers to meet their targets for the upcoming EV revolution. In Asia, SK Innovation completed a whopping $3.9 billion deal with Australian Mines for cobalt and nickel. The filing entails the acquisition of all project output from the miner, over a 13-year period, which will be used to manufacture power cells at a Hungary-based plant.

"The price of cobalt has more than tripled in the past 18 months to trade above $80,000 a metric ton," explained Jack Farchy and Mark Gurman from Bloomberg.

In 2005, Apple pulled a similar act when it secured a colossal supply of NAND flash memory over a five-year timeline. This occurred at time when the iPod dominated the portable music player scene. During that period, the demand for flash memory components was filled by Intel, Samsung Electronics, Micron and Hynix.

EVs and Copper

Cobalt is not the only mineral that is in high demand by EV manufacturers. Copper, a non-ferrous metal used in industrial projects, is also a primary material in EV production.

"Demand for electric vehicles is forecast to increase significantly over the next ten years as technology improves, the price gap with petrol cars is closed and more electric chargers are deployed," said IDTechEx Senior Technology Analyst Franco Gonzalez.

"Our research predicts this increase will raise copper demand for electric cars and buses from 185,000 tonnes in 2017 to 1.74 million tonnes in 2027."

IDTechEx is responsible for publishing an eye-opening report about the effects of EV manufacturing on copper demand. According to the report's authors, demand for the industrial metal could increase exponentially over the next decade.

For reference, a standard EV requires up to 183 pounds of copper, while an electric bus needs roughly 224 pounds of the material. Currently, copper demand is being fueled by China's growing economy.

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