Cobalt Firm Says Chinese Car Companies Keen to Secure Supplies

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(Bloomberg) -- Cobalt 27 Capital Corp., owner of the world’s largest private stockpile of cobalt, said it is in talks for potential tie-ups with major Chinese companies seeking to secure supplies of the key metal in batteries powering electric vehicles.

Car and battery makers from China have approached Cobalt 27 to discuss long-term partnerships and supply contracts, Anthony Milewski, chief executive officer of the Canadian firm, said in an interview in Beijing on Monday. Milewski said he has at least 17 such meetings lined up in major Chinese cities over the next three days.

“There’s a lot of interest and it is natural because it is where all this will happen,” Milewski said, declining to identify the companies. “China is going to be the world leader of electric vehicles.”

China is pushing the development of low- or zero-emission cars, with a target to sell 7 million new-energy vehicles a year by 2025. Sales of battery-powered, plug-in hybrid and fuel-cell vehicles in China -- which surpassed the U.S. in 2015 to become the biggest electric-car market -- could jump by more than a fifth to surpass 1 million this year, the China Association of Automobile Manufacturers estimates.

EVs will probably account for 30 percent to 35 percent of the worldwide vehicle market by 2025, surpassing current projections as China outpaces other countries, Milewski said. That will push annual cobalt demand to at least 250,000 metric tons by then from the current 100,000 metric tons, he said.

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Cobalt 27 is weighing a dual stock listing in Shanghai or Hong Kong to expand its investor base, Milewski said, without giving a timing. Shares of the company soared more than 800 percent in Toronto last year.

“EVs are happening in the region and so access to the investor community is important,” Milewski said. “Investors understand the EV story and valuations reflect that.”

Backed by a Russian billionaire, Milewski started buying metal from mining companies and putting it in warehouses in 2015 when most industrial commodity prices were slumping. Prices have since surged almost fourfold, making Cobalt 27’s inventory of almost 3,000 metric tons worth about $250 million.

Cobalt availability is likely to remain scarce with major consumers and traders hunting for the metal, whether in the form of long-term supply deals or for stockpiling, Citigroup analysts said in a research note on Monday. Cobalt 27 has been persistently raising funds to buy and store more physical cobalt, placing upward pressure on prices, Citigroup said.

©2018 Bloomberg L.P.

With assistance from Yan Zhang, Martin Ritchie, Tom Mackenzie

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