SK Innovation has signed a six year agreement with Glencore for up to c.30,000 tonnes of cobalt contained in hydroxide between 2020 and 2025.
SK Innovation commented:
“In signing this contract with the world’s largest producer of cobalt, SK Innovation has secured supply of a metal which is both core to battery production and in short supply. SK Innovation stands ready to produce the batteries required to meet the significant anticipated battery demand.
The electric vehicle (EV) battery market is growing fast and the total market size will be c.US$150bn in 2025, larger than the semiconductor market. Accordingly, cobalt demand will keep increasing. We assume global cobalt demand for EV batteries will be 32kt in 2020 and 92kt in 2025. With this contract, SK Innovation can produce batteries for 3 million EVs.
Glencore and SK Innovation are committed to ensuring ethical and responsible production and procurement of cobalt. There are continuous allegations of human rights abuses linked to cobalt production, and SK Innovation is voluntarily focusing on ethical and responsible sourcing. The cobalt in this supply contract will be sourced from Glencore’s industrial mining operations located in the DRC. Both parties agree that the DRC operations will be independently audited each year against the “Cobalt Refinery Supply Chain Due Diligence Standard”. This standard is defined by the Responsible Mining Initiative.
Amid growing battery demand, SK Innovation will do its utmost to ensure stable raw material supply while fulfilling its ethical responsibilities.”
Nico Paraskevas, Head of Copper & Cobalt Marketing, Glencore, commented:
“We are pleased to enter into this long-term cobalt supply agreement with SK Innovation.
This newly established partnership demonstrates the continuation of Glencore’s cobalt hydroxide marketing strategy to secure long term supply agreements with key players in the lithium-ion battery supply chain. This illustrates Glencore’s important role in supplying the materials that enable the energy and mobility transition and Glencore’s commitment to responsible production.”