MINING INDABA: Panasonic eyes upstream investment in battery raw materials

Japan’s Panasonic is considering investing in the upstream part of the battery raw materials industry in order to have better oversight of quality, pricing and supply chain responsibility, a company executive said.

The move has been led by the company’s growing consumption of raw materials for batteries due to rapid growth in demand for electric vehicles (EVs), Kazunori Tanaka, general manager of the group’s electronic device materials department, said.

“The chain is longer, so to understand and control the chain is not possible. In order to have some more control over the supply chain, Panasonic has made purchases of raw materials by itself,” he said.

“In the future we intend to go upstream to purchase intermediates and try to get a more clear picture of the supply chain. We would like to establish long-term strategic partnerships with upstream companies,” Tanaka added.

The EV expansion “spurred a revolution in the automotive industry that no one had experienced before,” he said on the sidelines of the 25th Mining Indaba in Cape Town, South Africa.

“It is very difficult to predict future actions, but many people predict that in the future we may face troubles securing raw materials. We have to carefully consider how to secure raw materials with a steady price in the future,” Tanaka said.

But this would not include buying a mine.

Ford Motor Co recently said during an interview with Fastmarkets that it was looking at being more collaborative in its partnerships in order to source its raw materials needs. While not in the cards currently, the automaker has not entirely ruled out eventually owning a mine.

Panasonic makes two main batteries for EVs: cylindrical lithium-ion batteries, which use a nickel-cobalt-aluminium chemistry; and prismatic cell batteries, which use a nickel-cobalt-manganese chemistry.

Tanaka said during a presentation at the event that by 2030 lithium demand for consumption in batteries is forecast to be around 10 times the level recorded in 2015, with nickel consumption expected to rise by 20-fold and cobalt demand by fivefold in the same comparison.

Worries related to the ethical production of cobalt, particularly in the Democratic Republic of the Congo, have made the company uneasy about securing supply in an already competitive market. “Our concern about responsible sourcing is one of the most important requirements,” Tanaka said.

Fastmarkets’ latest price assessment for standard-grade cobalt was at $18.75-20.35 per lb on Friday February 1, down by 28.3% from $26.50-28 per lb at the end of December and a nearly two-year low. The price was last recorded below this level on February 15, 2017, when it was at $18.85-19.95 per lb.

Persistent selling pressure is dominating the spot market, with buyers minimizing their buying activity due to expectations that the metal price will continue to move lower.

Meanwhile, lithium supply volumes are expanding, and “constructing a strong relationship with major producers is important,” Tanaka said.

As for nickel, consumption will increase dramatically, he said, although its use in batteries as a portion of overall consumption trends is minor.

“Securement of nickel for chemical usage is getting more difficult, however,” Tanaka added.