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Glencore CEO Warns of China’s Dominance in Electric Vehicle Market

In the photo, Glencore head Ivan Glazenberg. Source: The Finnacial Times

As the world’s largest producer of a key metal for batteries noted, the American and European auto industries risk falling behind Chinese competitors if they fail to secure supplies of cobalt.

Glencore CEO Ivan Glasenberg said at the FT Future of the Car Summit on Wednesday that it would be naive to think Western automakers can always count on battery supplies from China for electric vehicles.

Glasenberg believes that Chinese companies quickly realized the vulnerability of supply chains, as cobalt mining is largely tied to the Democratic Republic of the Congo. Cobalt is a metal required to make lithium-ion batteries used in electric vehicles that can travel long distances.

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“Western companies did not understand this. They either do not believe that this is a problem, or they think that they will certainly get batteries from China, ”he said. “But what will happen if this does not happen, and the Chinese will say that we will not export batteries, but will export electric vehicles. Where can we get the batteries then? ”He asks.

Such warnings are related to the fact that the car supply chains are in the spotlight due to a shortage of chips, and the cost of cobalt has jumped by 50% in the past six months.

Cobalt demand will continue

Cobalt is a by-product of copper and nickel mining, with over 60% of the world’s annual cobalt production (130,000 tonnes) coming from the DRC, one of the poorest countries in Africa.

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Chinese companies already control about 40% of production in the DRC, and have also signed long-term supply agreements with Glencore, the only major Western producer operating in the country.

China also dominates cobalt processing and invests in mines. Earlier this year, the $ 130 billion Chinese battery manufacturer CATL paid $ 137 million for a 25% stake in China Molybdenum’s Kisanfu copper-cobalt mine.

Glasenberg said Glencore would consider selling a stake in one of its DRC mines to a western automaker, although it has not received any offers.

“Surprisingly, there are no offers yet. Personally, I think that would be a great idea. Henry Ford did it in the past. It has connected the supply chain, whether it be rubber plantations … or the supply of iron in Brazil, ”he added.

Glencore is expected to produce about 35,000 tonnes of cobalt this year, a figure that could rise by 25,000-30,000 if the company decides to develop a new orebody at the Mutanda mine in the DRC, which has been mothballed.

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“I think the work will begin in the next 18 months,” said Glazenberg.

Asked if he was worried about the decline in cobalt in batteries, Glasenberg said it was more than offset by the explosive growth in electric vehicle sales.

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