#Cobalt: #BMW the only carmaker with a direct to mine raw material sourcing approach

Posted on July 21, 2020 by Nanthakumar Victor Emmanuel, P.Eng One comment

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German luxury vehicle maker BMW signed a US$2.3 billion long-term deal earlier this month with Swedish battery maker Northvolt, the latest of such deals, as European carmakers try to compete with Tesla in the burgeoning electric vehicle (EV) market.

Tesla’s gigafactories and battery technology have long given it an edge in the EV market (Northvolt was started by two former Tesla executives), but when it comes to the sourcing of raw material for lithium-ion batteries, the California company faces the same challenges as traditional carmakers.

This makes another, much smaller deal BMW struck more significant in finding an advantage over Tesla and stealing a march on its German and Japanese competitors.

The Munich-based carmaker signed a five-year cobalt supply deal on July 10 with Moroccan miner Managem worth US$112 million. Managem owns Bou-Azzer in the Anti Atlas mountains, the only primary cobalt mine in the world and in operation since 1930.

BMW says the offtake agreement, first announced a year ago, covers one-fifth of its requirements for the NCM (nickel-cobalt-manganese) cathodes in its batteries, which together with Tesla’s NCA (nickel-cobalt-aluminum) represents more than 90% of the market.

The other 80% of the cobalt it needs comes from the Murrin Murrin mine in Australia, a Glencore (LSE: GLEN) owned operation, which makes BMW the only carmaker with a direct to mine raw material sourcing approach.