LONDON – Mining giant Glencore (GLEN.L) has signed a major deal to sell up to 20,000 tonnes of cobalt products to a Chinese firm, a move that in turn helps Volkswagen (VOWG_p.DE) secure car batteries for its shift to electric vehicles, four sources said.
The four-year agreement between Glencore and Chinese battery maker Contemporary Amperex Technology Co Ltd (CATL), struck last October, comes as global carmakers race to lock in battery supplies and move away from traditional combustion engines.The trend was reinforced this week by Chinese-owned, Sweden-based Volvo, which said all of its models launched after 2019 will be electric or hybrid.
Cobalt is a key ingredient in the lithium-ion batteries used to power electric vehicles (EVs), with sales expected to grow fast in coming years as governments around the world clamp down on polluting fossil fuels such as diesel and gasoline.
“It was a triangular deal where Glencore, CATL and VW got round the table,” said a cobalt trading source. “CATL on their own weren’t willing to commit to such a large quantity so VW said they would buy the batteries (from CATL).”
The contract to supply cobalt hydroxide and alloys, the sources said, was based on cobalt metal prices which at the time were around $28,500 a tonne on the London Metal Exchange CBD3. They have since more than doubled to above $58,000 a tonne.
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