High Voltage: Corruption risks weigh on cobalt supply
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Our High Voltage column wraps all the news driving ASX stocks with exposure to lithium, cobalt, graphite, nickel, rare earths, and vanadium.
With some 85 per cent of the world’s cobalt originating from jurisdictions with higher levels of corruption than the worldwide average, it is not surprising that where your supply of the critical battery metal comes from continues to be a thorny issue.
Already under siege for the widespread use of child labour in countries like the Democratic Republic of the Congo, which supplies more than 66 per cent of all cobalt, the latest update to Roskill’s Economic, Social and Governance coverage highlights another question mark that cobalt consumers need to answer.
The research consultancy firm noted that using the World Bank’s ‘Ease of Doing Business’ (EoDB) rankings – with lower scores indicates better, usually simpler, regulations for businesses and stronger protections of property – the top 10 cobalt-producing countries average a score of 147 compared to the global average of 95.
Likewise on Transparency International’s ‘Corruption Perceptions Index’ (CPI), which scores less corrupt countries higher, the same countries had an average of 26 compared to the global average of 43.
By way of comparison, Denmark and New Zealand achieved a CPI score of 88 out of 100.
And it is not likely to get any better.
Roskill expects that future expansion of cobalt production will continue to be centred in traditional producing countries such as Australia, Canada and the DRC.
While the former two are largely free of ESG issues, the DRC is still expected to dominate cobalt production over the next decade.
This is especially concerning given that Macquarie has flagged that global sales of electric vehicles in the first quarter of 2021 are already up 165 per cent year-on-year.
Triton has joined the European Battery Alliance, which seeks to create a competitive and sustainable European battery industry.
It provides access to a network of more than 600 stakeholders from the public and private sectors covering the entire supply chain.
Interim chief executive officer David Edwards says that the company’s graphite is ideally suited for battery markets and that it is ‘fundamental’ that it builds partnerships within Europe, which is a significant future market for EVs.
Last week, Volt entered into a binding agreement to acquire a 70 per cent interest in the producing Zavalievsky graphite business in Ukraine.
Zavalievsky is about 280km south of Ukraine’s capital Kyiv (Kiev) and has existing production of graphite products to supply traditional European industrial markets including refractories, electrodes and lubricants.
It also has the potential to become a producer of spherical purified graphite for the lithium-ion battery market in the near term.
Vulcan is also on the acquisition trail, signing a binding agreement to purchase geothermal surface consultancy company Global Engineering and Consulting Gmbh (gec-co).
The new acquisition has a world-leading engineering team with significant experience in surface development of geothermal projects in Germany and world-wide.
It follows on a recent agreement to acquire sub-surface development company GeoT.
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