Ted Miller, senior manager for energy storage strategy and research at the Michigan, US-based company, said Ford had “considered all options” and ultimately opted for a more collaborative approach.
“We historically have tended to be buyers of technology - our first-tier supplier is a cell producer. That’s several tiers from the mine operation,” Miller told Fastmarkets during an on-stage interview at the 25th Mining Indaba in Cape Town, South Africa.
“What we’ve found to be our pathway forward is collaboration throughout the whole chain. Our cell producers are involved, and we’re working with some of the materials - we're really quite directly involved,” he said.
“We’re not yet in offtake agreements or doing mine deals, but this may be something that over time we need to evaluate. We continuously evaluate whether we have the right plan, if it’s robust; we’re trying to do the right and responsible thing,” Miller added.
Efforts by Ford’s peers to go further down the supply chain have so far fallen flat.
In 2017, German automaker Volkswagen’s efforts to secure long-term supplies of cobalt - a key ingredient in batteries - were aborted after the company failed to reach agreement with key suppliers. Similarly, BMW said it was looking to secure a 10-year supply of cobalt and lithium for EV batteries as part of a new strategy, but no deal has been announced to date.
Their moves came as the price of cobalt soared amid strengthening demand for lithium-ion batteries, which are used in electric vehicles.
Cobalt metal prices reached near 10-year highs of $43.70-44.45 per lb, in-warehouse, last April, according to Fastmarkets’ benchmark standard-grade cobalt price history.
But rising production of cobalt hydroxide - the intermediate product from which cobalt sulfate, the raw material used in the manufacturing of battery cathodes, is made - has allayed concerns over cobalt supply tightness in the near-term.
Benchmark cobalt metal prices are now at a two-year low of $18.75-20.35 per lb - down 44% from mid-November - facing pressure from good availability of metal not committed to long-term contracts.
Miller said the industry faces risks throughout the supply chain and needs to “join hands and take the risks mutually.”
“One of the things we’re concerned about is that while we want to ensure customers get what they want in terms of cost, in reality everyone has to be economically healthy. Our suppliers have to be in the equation as well,” he added.
Ford plans to launch an electric version of its F-150, the best-selling vehicle in the United States. Of the 40 electrified vehicles Ford plans for its global lineup by 2022, 16 will be fully electric and the rest will be electrified vehicles, including both plug-in hybrids and full hybrid electric vehicles.
The company said that while it had developed a deep knowledge of the pricing of industrial metals such as aluminium - which is traded on the London Metal Exchange - it had initially been significantly less well-versed in battery materials such as lithium and cobalt. “It certainly presented a challenge,” Miller noted.
So the company put its finance, purchasing and research teams together to better understand these newer markets.
Ford also engaged with experts from outside the auto industry, including from the mining industry and consultants from other parts of the supply chain.
“We recognized that it just wasn’t a known part of our business, but I think we can be proud that we dug in and engaged so deeply - we tried to understand what the key issues were and where might we face problems. The solutions are still in the works,” Miller said.
Automaker Ford Motor Co has no current plans to take stakes in mining assets or secure direct offtake agreements with mining firms in order to produce batteries for electric vehicles, although it hasn’t ruled it out entirely.