Diversified natural resources company Glencore is set to supply cobalt to electric vehicle manufacturer Tesla, the Financial Times newspaper reported June 16.
Both companies declined to comment on the matter to S&P Global Platts.
S&P Global Market Intelligence said the deal, as reported by the FT, may involve up to 6,000 mt per year of the battery metal and would be a boost for Glencore's cobalt business after a two-thirds slide in the metal's price over the past two years to about $30,000/mt.
Cobalt from Democratic Republic of Congo is to be processed into battery precursor materials in China.
The purchase agreement will increase Tesla's reliance on supply from DRC, which accounts for over 60% of global cobalt production.
Tesla has been increasing control over its supplies while other auto makers have counted on external battery producers to source cobalt.
Tesla said its battery cell suppliers were required to purchase commodities from refiners certified by the Responsible Minerals Initiative, with Glencore one of only two miners in DRC certified by the agency, the FT said.
Tesla impact report
On June 8, Tesla said in its 2019 Impact Report it was committed to only sourcing responsibly produced material.
"Tesla suppliers are required to provide evidence of management systems that ensure social, environmental and sustainability best practices...as well as demonstrate a commitment to responsible sourcing into their supply chains," it said.
Artisanal supplies from the DRC are vital to keep the cobalt market balanced, but have become harder to track and audit due to a higher incidence of local processing, participants in an introductory webinar to DRC Mining Week said June 9.
As ASM accounts for 20%-40% of cobalt production from the DRC -— which, in turn, supplies two-thirds of total global production of the minor metal and employs as many as 200,000 people there —- "We cannot ignore ASM," said James Nicholson, head of corporate responsibility at global trader Trafigura, a major buyer of the metal.
Democratic Republic of Congo, where Glencore operates one of the world's largest cobalt mines, produces around 70% of the world's supply, for which demand has grown rapidly in recent years due to its use in lithium-ion batteries used in electric vehicles, mobile phones and laptop computers.
Responsible sourcing key
Late 2019, Glencore joined the Responsible Sourcing Blockchain Network (RSBN) to support responsible sourcing and production practice industry-wide.
Nico Paraskevas, Glencore's head of marketing for copper and cobalt, said: "RSBN plays a key role in advancing the sustainable partnership between the producers of commodities that will enable the transition to a low-carbon economy and key consumers around the world. We look forward to working with the network to further embed responsible sourcing good practice across the mineral supply chain."
RSBN is designed to be adopted across industries by original equipment manufacturers in automotive, electronics, aerospace and defense as well as their supply chain partners such as mining companies and battery makers.
At the start of 2020, Glencore signed a five-year deal with Samsung SDI for the supply of cobalt hydroxide for EV battery cells. The news followed other long-term deals with BMW, GEM, SK Innovation and Umicore.
