Electric vehicle OEM Tesla has been in talks with Glencore in a bid to secure a cobalt supply chain for lithium-ion battery packs used at its China gigafactory, according to reports.
Swiss firm Glencore has been in negotiations for a long-term contract to ship cobalt to Tesla’s electric-vehicle factory in Shanghai, according to news outlet Bloomberg.
Executives from both companies hammered out terms of the deal ahead of the first vehicles rolling of the production plant in late December, according to the media firm whose source declined to give details about the size and value of the supply deal.
A Glencore spokesman refused to comment to BEST on the story.
Industry analysts forecast cobalt production will rise by 5,000 tonnes this year, amounting to a 3.5% increase to 143,600 tonnes— somewhat less than the expected growth rate of 6.3% forecast last year.
The Shanghai factory is using cells from LG Chem, rather than its long-term collaborator Panasonic, which is manufacturing cells for use at Tesla’s Gigafactory 1 in Nevada, US.
In November, Glencore placed its Mutanda mine in the Democratic Republic of Congo (DRC) on ‘care and maintenance’ due to difficulties procuring sulphuric acid, a key input for copper and cobalt extraction.
Glencore’s Mutanda and Katanga operations in the DRC were expected to produce 39,000 tonnes of cobalt hydroxide last year, according to market analysts Benchmark Minerals. The firm predicted the halting of the Mutanda operations would see 20% of the world’s cobalt supply come offline.
Benchmark Minerals expects the supply of cobalt raw materials, particularly cobalt hydroxide, to tighten in 2020 and stockpiles accumulated over the last two years begin to reduce.
In March, 2018, Glencore signed a deal with Chinese battery recycler GEM to supply 52,800 tons of cobalt hydroxide up to 2020 to China’s electric vehicle market.
Last April, BMW signed a supply contract with Glencore in Australia— following a letter of intent for supply from Managem, in Morocco, the previous year— that “guarantees us security of supply until 2025 and beyond”.
A month later, Glencore signed a deal to supply cobalt hydroxide for Umicore’s battery materials operations, days after the Belgian firm announced it was buying Freeport Cobalt’s cobalt refining and cathode precursor activities in Finland.
Umicore said at the time the cobalt would be sourced from Glencore’s DRC mines including Mutanda.