Tech metal update: blackmarket cobalt, flake graphite caution, and tin’s energy future
Here are two facts to know about the cobalt business. One, that up to 35% of the cobalt produced in the world comes from mining operations that are losing money (mainly from the nickel they also produce). Two, that some 10,500 tonnes a year (of the total 110,000 tonnes mined last year) is pulled out of the ground by artisanal miners in the Democratic Republic of Congo.
Actually, there is a third fact: while the use of child labour in cobalt production is still serious, it may not be as bad as first thought (at least in terms of the proportion of cobalt mined in the Congo, if not the morality). And Fact Four is that China is propping up this illegal mining.
The DRC produces 60% of the world’s cobalt and all that 10,500 tonnes of artisanal mining would, if accounted for separately as their own nation, mean that the artisanal miners would be the second biggest country in the cobalt business, and well ahead of Russia and Australia which each produce about 4,000 tonnes a year.
These facts come from a newly released study by Edward Spencer at London-based CRU Group, one of the leading mining analyst firms. He looked at the artisanal industry in light of the now well publicised report by Amnesty International that highlighted the hazardous conditions faced by artisanal miners in the DRC.
His findings are that around 100,000 diggers, sorters and washers are working in these small mining operations, earning an average $3 a day. The vast majority of artisanal units (of cobalt) mined in the DRC head into the technology supply chain via China which, based on CRU estimates, accounted for around 50% of global refined cobalt production in 2015 and is the world’s leading supplier of refined chemicals to the rechargeable batteries sector, writes Spencer.
Re child labour, Spencer says this after investigating the figures: if a maximum of 3,500 tonnes of cobalt was mined by children in 2015, and that global production was around 110,000 tonnes, the recent claims that “half the cobalt in our batteries is mined by children” are clearly over-estimated. But he agrees that the child labour problem is still severe and the leading technology companies will continue to be pressured to reassess and monitor their supply routes.
Get our daily investorintel update
The good news for those companies, such as Formation Metals (TSX:FCO) in North America and Broken Hill Prospecting (ASX:BPL) in New South Wales, is that CRU estimates that increased government restrictions, increased regulation by end-user companies and variations in metal prices that inhibit buying by international traders, could see the output by Congolese artisanal miners decrease by up to 30% by 2020.
The one unknown factor is how many nickel mines that have cobalt as a by-product might be forced to mothball operations if the nickel price stays low (it fell $200/tonne in London on Tuesday to close at an uninviting $8450/tonne). In that case, says CRU, artisanal miners might get a second wind in order to fill the supply gap.
Clearly, prospective cobalt producers that are not reliant in nickel as their mainstay would also benefit from such a situation.
Last week I reported that, at the recent inaugural graphite conference held in Australia, Andrew Scogings, principal geologist at Perth-based mining consultants CSA Global, criticised the standard of reporting by graphite explorers. Andrew has kindly sent me further information on the technical aspects of reporting a graphite resource, and I think the following words about flake graphite will be of interest to InvestorIntel readers:
“Flake graphite deposits can be explored using methods such as electromagnetic geophysical surveys (both ground and aerial), trenching, pitting, reverse circulation percussion drilling (RC), or Diamond Drilling (DD). Testing must be based on appropriate and representative samples and, in the case of graphite, RC drill samples are not suitable for the necessary metallurgical tests, due to the pulverising effect of the drilling technique, and the high pressure air causing loss of graphite fines into the country rock. Methods that deliver large intact pieces of mineralisation, such as trench sampling and DD, are required to undertake extraction testwork, by methods such as flotation, to provide meaningful data on potential products. Microscopic examination, while being an important and necessary first step in assessing a deposit, does not provide adequate information on likely graphite products once a rock is actually crushed. However, it is noted that a combination of RC and DD is probably acceptable for mineral resource estimation in most cases, provided there is sufficient support from the valid metallurgical testwork.”
Tin and Energy
Here’s an amazing figure: there are around 8,000 research and development publications issued each year on tin – and the major theme is the metal’s use in energy.
ITRI (the London-based International Tin Research Institute) lists the uses of tin in the energy sector which include batteries (lead-acid, magnesium-ion, fuel cells), generation (solar cells, solar storage), hydrogen (methane to hydrogen, water spitting) and clean fuel (biodiesel catalysts, fuel catalysts).
But ITRI says tin may also have a role to play in lithium-ion batteries, to stabilize the silicon.
And tin is seen by ITRI as the leading anode material for what it calls “post lithium-ion” battery technologies, including magnesium-ion with Toyoto having a patent to use antimony and tin alloy, and bismuth and tin alloy. Tin sulphide could be used in sodium-ion storage technology.
Tin, like cobalt, is another tech metal on which to keep tabs.
InvestorIntel is a trusted source of reliable information at the forefront of emerging markets that brings investment opportunities to discerning investors.