Glencore is aiming to supply the electric vehicle industry with ethical nickel and cobalt, demonstrating the mining industry’s commitment to having a positive social impact.
Global nickel producers are struggling with one common issue: the volatility of the commodity.
Wood Mackenzie research director Andrew Mitchell says nickel is defying fundamentals and its price continues to rise along with most base metals. But fundamentally, the metal is in oversupply.
In spite of this, there is still a lack of project development in Australia.
“Capital costs for project development are significant and lenders want to ensure a return on investment – not easy in a volatile market like nickel,” Mitchell tells Australian Mining.
“Unlike China where investments are made (seemingly) for the greater good of securing materials for China to forge ahead on its growth and development strategy, in the west there is a need to prove it’s a worthy investment in the near as well as long term.
“Any project which gets financed now is likely to take two to three years to construct and then five years to get close to capacity (iron-nickel or high pressure acid leach), so in theory we should be passed the overshoot by that time.”
The case might be different to relatively small-scale miners such as Mincor Resources or Panoramic Resources, Mitchell says.
Equipped with a skilled workforce and safe operating practices, the companies are able to get their nickel projects going with a relatively modest capital outlay and perceived low technical risk.
Then there’s a major player like Glencore, which runs global nickel operations, including in Australia and the Democratic Republic of Congo (DRC).
Glencore states that the DRC is responsible for around 70 per cent of global supply and almost all cobalt in the form of hydroxide.
This is a country where Glencore was employing more than 15,000 employees and contractors to support the Kamoto Copper Company and Mutanda Mining operations as of July last year.
It addresses the issues surrounding dangerous artisanal and small-scale mining operations in the DRC – an important source of employment for many – by creating local employment head on.
“We also work with local NGOs and churches to deliver holiday camps for school children to help discourage their participation in ASM activities. In 2018, over 9000 children participated,” according to Glencore.
The company produced 12,500 tonnes of cobalt at its African operations in the first half of the year.
At the Murrin Murrin operation in Western Australia, meanwhile, Glencore produced 17,800 tonnes of nickel and 1600 tonnes of cobalt over the same period.
“Our Murrin Murrin operation is Australia’s largest cobalt producer and one of the country’s largest producers of nickel,” a Glencore spokesperson tells Australian Mining.
“Our Murrin Murrin operation is consistently achieving safe, efficient and productive nickel and cobalt production.
“Last year, we produced 40,668 tonnes of nickel and 3717 tonnes of cobalt at Murrin Murrin.
“We believe widespread adoption of electric vehicles and renewable energy sources as a means to decarbonise energy supply will create significant new demand for these commodities.”
The prospects of cobalt look encouraging to Wood Mackenzie’s Mitchell, who forecasts higher prices for the commodity in 2021 and 2022.
“Near-term concerns over cobalt raw material supply has provided some support for prices, but prices have still declined. However, if disruptions to trucking and shipping continue then there is certainly upside potential in the remainder of the year,” he says.
Still, changes are needed for Australia to achieve its ambition to be a critical minerals powerhouse.
Beyond the desire and political and monetary support, Mitchell believes a decision needs to be made on how far through the chain to progress the objective: whether only chemicals or through to pre-cursors, cathode active materials to even finished batteries.
“All the necessary stars (still need) to align for things to progress,” Mitchell says.
“Expertise in the downstream areas will be required, so it will take time. But this is a recurring theme across the globe: to remove dependence on a single point of potential failure. Europe is looking to do a similar thing.”