Last year was a brutal one for the battery metals sector. After slumping in 2023, prices of lithium, cobalt and nickel ground steadily lower in 2024.
Cobalt miner Jervois Global is the latest casualty, announcing that one of its lenders will take the company private as part of a pre-packaged bankruptcy. The company had already suspended work on its Idaho cobalt mine just weeks before it was due to open in 2023. It needs a cobalt price of at least $20 per pound to reopen the site, almost double the current spot price of $11.
Cobalt prices have been crushed by a tsunami of new supply from the Democratic Republic of Congo. China's CMOC Group, which is the country's largest producer, more than doubled output last year.
The same dynamic has played out in both nickel and lithium markets.
Indonesia's nickel production boom has swamped the global nickel market and contributed to the glut of cobalt, a by-product of the country's nickel processing sector. Western lithium producers have closed assets and deferred new capacity even as Chinese and African miners ramp up output.
The battery metal supply surge has coincided with weaker-than-expected demand from the all-important electric vehicle (EV) sector.
The global EV market is still expanding with sales growing by an impressive 25% year on year in the first 11 months of 2024, according to consultancy Rho Motion.
However, just about all the growth was in China with Western buyers still reluctant to make the shift from internal combustion engine to electric drive. Moreover, Chinese buyers are increasingly opting for hybrids or plug-in hybrids over pure battery vehicles. These have batteries about a third of the size of pure battery models, meaning a similar-sized reduction in cathode inputs.
Batteries themselves are also evolving with the resurgence of lithium-iron-phosphate chemistry heralding more bad news for nickel and cobalt markets.
The consensus is that prices are now so low there is little further downside. But a recovery is going to depend more than anything else on supply discipline. Or the lack of it.
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