Car Makers Look to Lock Up Cobalt Supplies From Responsible Sources

LOS ANGELES, July 2, 2019 /PRNewswire/ -- USA News Group –– Automakers have been among the first to seek ethical supplies of cobalt and now are going as far as to claim they will by only buy from producers who offering proven responsible sources. BMW, among others, are leading the charge.

Pressure to Source Responsibly Rising

Wherever BMW and automakers source critical supplies of cobalt, there is growing pressure to find responsible sources. BMW Board member Andreas Wendt, who is charge of the company's procurement is reported as saying that BMW wants to make sure that the cobalt they purchase is guaranteed not to use child labor in the production process. This means a change in suppliers might be on the horizon for BMW. According to the news source Reuters, a spokesperson for Glencore, which mines for cobalt, has disclosed that BMW has agreed to buy its cobalt from the Australian Murrin mine. In addition, a cobalt source in the African country of Morocco is reportedly under consideration.

These new sources are expected to be adopted into the automaker's next generation of batteries. That could come online as early as next year. It appears that the pressure has real world consequences as well: BMW was reacting during a briefing that coincides with an announcement by the London Metal Exchange that it is launching an initiative that would potentially delist brands that can't prove responsible sourcing of resources by 2022.

Companies that can prove responsible sources of battery metals including cobalt, could see a major increase in market share in the battery metals space including:

Freeport-McMoRan (NYSE: FCX)

Freeport-McMoRan Inc. engages in the mining of mineral properties in the United States, Indonesia, Peru, and Chile. It primarily explores for copper concentrate, copper cathode, copper rod, gold, molybdenum, silver, and other metals, as well as oil and gas. The company declared a cash dividend of $0.05 per share payable on May 1, 2019 to holders of record as of April 15, 2019 for its common stock.

Glencore (OTCPK: GLCNF) (OTCPK:GLNCY)

Glencore plc Metals and Minerals segment is involved in smelting, refining, mining, processing, and storing zinc, copper, lead, alumina, aluminum, ferroalloys, nickel, cobalt, and iron ore. The company recently signed an integration agreement pursuant to which the Agua Rica project would be developed and operated using the existing infrastructure and facilities of Minera Alumbrera Limited in the Catamarca Province of Argentina. Glencore plc was founded in 1974 and is headquartered in Baar, Switzerland.

China Molybdenum (OTCPK: CMCLF)

China Molybdenum Co., Ltd., together with its subsidiaries, engages in the mining and processing, smelting, deep processing, and scientific research of molybdenum, tungsten, copper, cobalt, niobium, phosphorus, and other base and precious metals in the China, Japan, Brazil, Switzerland, Singapore, Finland, Korea, and internationally. CMOC, has inked a stake transfer deal with BHR Newwood Investment Management, buying 100% interest in BHR DRC, which owns 24% in copper mine Tenke Fungurume Mining S.A. (TFM), located in Katanga Province in the Democratic Republic of the Congo.