Automotive, cobalt: BMW signs offtake with Managem-CTT for Moroccan cobalt

BMW has signed a deal with Moroccan cobalt miner Managem-CTT, the world’s only pure play cobalt mine, for the procurement of cobalt to be used in Li-ion batteries for its range of electric vehicles. The definitive offtake agreement follows on from the companies signing an MOU regarding the direct purchase of cobalt in January 2019. The deal is reportedly worth US$122M and serves roughly 20% of BMW’s Li-ion battery cobalt requirements to 2025.

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 At current market prices, the Managem agreement is estimated to provide BMW with approximately 3.9kt of cobalt over five years. BMW has stated that approximately 20% of the company’s cobalt requirements to 2025 would be accounted for by Managem and the remaining 80% by Glencore’s Murrin Murrin operation. This implies that approximately 19.6kt cobalt will be required and provided for by the two sole suppliers between 2020-2025. For Managem and Glencore to provide 100% of BMW’s cobalt requirements, approximately 85% of each company’s respective mine production would need to be assigned to BMW, totalling around 1.5ktpy and 2.4ktpy from Managem and Glencore respectively. These volumes are significantly higher than the aforementioned estimated deal volumes (see Figure 1). Furthermore, this may also imply an agreed long-term cobalt metal price at a discount to current market levels if Managem were to supply an average of 1.5ktpy.

Figure 1: BMW: Public direct mine sourcing cobalt agreements1

Source: Roskill, public announcements
Note: 1-All figures expressed in terms of contained cobalt

It should also be noted that both Managem and Glencore’s Murrin Murrin produce cobalt metal products that are not suitable for direct use in NCM precursor manufacture. So the metal will require further chemical conversion via tolling into a sulphate form. Arrangements with such cobalt sulphate producers are currently undisclosed by BMW. Whilst Roskill has determined the cobalt sulphate suppliers of both BASF and Ronbay (active material providers to BMW’s Li-ion cell suppliers), their respective sulphate production may not necessarily be destined for BMW Li-ion cells or currently use metal as feedstock (see Figure 2).

 Figure 2: BMW: Direct & indirect EV LiB supply-chain suppliers1

Source: Roskill, public announcements
Note: 1-Does not depict BMW’s entire supplier range or include R&D project development partners such as Umicore

Compared to other competing OEM’s, BMW has taken a proactive approach in procuring its required cobalt units directly from operating mines. A core driver of this strategy has been to minimise exposure to DRC cobalt production and also to increase control, transparency and auditability of its cobalt supply. Although efforts are being made to avoid DRC cobalt supply, BMW has not shied away from the fact that completely by-passing DRC production is almost unachievable given the scale of cobalt required in future.

This is evident in several initiatives that BMW Group is a part of, such as the Responsible Cobalt Initiative and its Cobalt for Development study in partnership with BASF, Samsung SDI and Samsung Electronics. Its involvement in these projects suggests the automotive manufacturer potentially needs to procure additional cobalt from DRC mines in future, though is focussed on a long-term strategic approach to sustainability in the region.

Roskill’s Lithium-ion batteries: Outlook to 2029, 4th Edition report was published in May 2020; Click here to download the brochure and sample pages for the report, or to access further information.

 Roskill’s NEW Cobalt: Outlook to 2030, 16th Edition report is scheduled for publication in September 2020. Click here for more information.

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This article was written by Jake Fraser. Please get in touch below if you wish to discuss further:

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