(Ecofin Agency) - The mining giant Glencore signed a cobalt sale agreement with the Chinese battery recycler GEM. Indeed, according to a financial notice published yesterday March 14, the company agreed to sell about a third of the cobalt it will produce, during the next three years, to GEM.

Under the agreement’s terms, between 2018 and 2020 the world’s leading cobalt producer will sell a total of 52,000 tons of cobalt hydroxide to GEM and its subsidiaries. The latter will first purchase 13,800 tons of cobalt hydroxide in 2018, then 18,000 tons in 2019 and finally 21,000 tons in 2020.

As demand for cobalt is rising, in anticipation of a forecasted shortage driven by the boom of electric vehicles, major producers are now able to exert more influence in price negotiations. Therefore, from $10 per pound (about 500 g) in Jan. 2016, the cobalt price increased to $39 per pound in 2018, the highest since July 2008 (before the financial crisis).

For the record, Glencore which operates cobalt mines in DR Congo, Canada, and Australia plans to produce about 39,000 tons in 2018, 35% of the forecasted global output. This output should increase to 65,000 tons in 2019 and drop to 63,000 tons in 2020.

Louis-Nino Kansoun