Do mobile phone companies have a role to play in the loss of their "blue gold" luster?

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Cobalt is one of the most prominent minerals in the modern world because of its great use in advanced industries.

In the course of history, cobalt has been used to color glbad and ceramics. The ancient Egyptians used cobalt compounds 2,600 years ago in their sculptures.

In the twentieth century, it was discovered that cobalt had characteristics that had become essential uses in the most advanced technologies.

When cobalt is mixed with other metals, very stiff alloys are corrosion resistant, stable and do not break down at high temperatures.

Such alloys are therefore used in the manufacture of aircraft engines, missiles, nuclear power plants, turbines, cutting machines and even in artificial joints of the hip.

All of these uses have made the precious metal, but what has made it more valuable to investors, is its use for making negative poles for rechargeable batteries.

It is therefore not surprising that investors call this metal "blue gold".

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Since 2008, the demand for rechargeable batteries is growing rapidly with the growing popularity of smartphones.

Four years later, the proliferation of electric vehicles dominated the imagination and future plans of cobalt traders.

Cobalt prices increased between 2016 and 2018, from $ 26,000 to $ 90,000 per tonne.

More than 50% of total cobalt demand goes to the battery sector. The European Union and the United States clbadify cobalt as a basic raw material.

Surprisingly, the price of metal has plummeted last year.

The Swiss-based mining company Glencore has announced the closure of the Motanda Cobalt mine, the world's largest mine in the Democratic Republic of Congo, claiming that it was "no longer economically viable".

Why this transformation took place, the frenzy of cobalt prosperity has diminished.

Storage

In short, the cobalt market has been overestimated. The era of electric cars is about to emerge, but this has not yet been fully realized.

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"Everyone is talking about it, but who manufactures electric cars on a large scale? Tesla, who else? How many charging points do you see in London?" Said a source in the area.

Another factor is that many metal traders, mainly in China and Africa, stock it in the hope of generating high profits when prices go up.

They started putting their shares up for sale after investors realized that the demand for electric cars was not as big as they expected.

But most badysts in the cobalt market say the fundamentals have not disappeared. This argument is based on the unstable nature of the treatment of cobalt, a non-free element in the world, but badociated with copper or nickel and to be extracted with the aid of acids and heat.

More than 60% of world imports of cobalt come from the Democratic Republic of Congo, often described as representing the cobalt market as Saudi Arabia represents the oil market.

But the DRC is not a country where it's easy to do business, says George Hebel, head of CRU International's cobalt lithium unit.

Huge climb

Despite democratic elections in the Democratic Republic of Congo (DRC), the first since the country's independence in 1960, the political situation remains unpredictable.

According to Hippel, the Congolese authorities "have promised to freeze government fees collected from mining companies by the government, but have suddenly increased them from 2.5% to 10% .It is a huge increase."

Earlier this year, global risk badessment consultant Verisk Mapelcroft placed the Democratic Republic of Congo at the top of the list of countries where natural resource industries are likely to be nationalized alongside Venezuela. What surrounds investment in these countries ".

Then comes the corruption.

Glencore herself is facing an investigation by a trade commission and the US Department of Justice regarding her operations in countries such as the DRC.

However, the closure of the Motanda mine by the company means that approximately 25,000 tonnes of cobalt will be withdrawn from the market, which will begin to stabilize prices.

Hippel thinks that it will be necessary to wait until the end of the year for the impact on the market to appear.

As prices start to rise, another influential factor will appear in the market: non-corporate primitive mining by independent artisans.

Expensive

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Many temporary miners work in appalling conditions and are injured or even slipped, using manual extraction in appalling conditions. The 2013 Amnesty International report described frequent injuries and bottlenecks in miners due to a lack of ventilation in pits and mine tunnels over 100 meters deep .

Forty miners, who were working illegally two months ago, were killed at a site in south-eastern Lualaba State, Democratic Republic of Congo, when the mine they were working on collapsed. .

UNESCO estimates that around 40,000 children work in mines in southern DRC.

Amnesty International has accused Apple, Samsung, Sony and a number of other companies of failing to carry out basic checks to ensure that their children are not employed in the mines.

Despite global convictions, rudimentary exploration is continuing and Heppel says that tides in this type of mining are strongly related to market price movements.

When prices rose in 2017, CRU International estimated that total mining output increased from 6,500 tonnes to 24,000 tonnes and, with lower prices, production fell to 10,000 tonnes.

The company expects artisbad production to reach record levels by 2020. Those who do will benefit from the recession caused by the closure of the Glencore site, endangering their health and their lives. in an irregular market to meet the growing demand for electric vehicles.

Cobalt supply chains seem chaotic, ranging from huts in the Democratic Republic of Congo to warehouses in China. It is often impossible to locate the source of this mineral or how it is extracted.

At a time when mobile phone manufacturers are required to check their suppliers, electric car manufacturers are not being criticized.

Future prosperity

However, CRU International says the time has come to buy cobalt at very high rates.

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"If we look at the electric car market in the next 10 years, we will see a big increase between 2020 and 2021," says Hippel. "This will be the peak of cobalt demand. Type of car

It is estimated that cobalt demand for the motor vehicle battery sector will increase by 24 to 35% per year between 2020 and 2023.

Hippel estimates that although Glencore was returning the Motanda mine (the closure was "for maintenance purposes"), in addition to artisbad mining, production would reach 40,000 tonnes per year and would not be sufficient to meet demand.

"New supplies of cobalt are needed.We are talking a lot about the new generation of battery technology, but up to now, there is no competitor of nickel and cobalt batteries", a- he declared.

"Some models, in theory or in the lab, are cheaper and more efficient, but so far, they have not proven commercially viable."