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Reuters
a day ago
- Business
- Reuters
Congo's cobalt dilemma unresolved by extended export ban
LONDON, June 27 (Reuters) - The Democratic Republic of Congo has extended its ban on exports of cobalt by three months as the world's dominant producer of the battery metal tries to convert its supply power into pricing power. After rallying sharply in February, when the market was caught out by news of the original ban, the price reaction this time has been more muted. Some sort of extension was widely expected. Moreover, it has become clear the physical supply chain has so much accumulated inventory, Congo's muscle-flexing has yet to faze buyers. Neither are investors buying into an imminent turnaround in the market. Cobalt Holdings, which planned to list a physical cobalt investment vehicle, pulled its initial public offering on the London Stock Exchange earlier this month. Congo's cobalt dilemma is how to restrict supply of a metal that is mined as a by-product of copper, an even bigger revenue earner for the resource-rich country. It might do better to focus on its own role in the supply chain. It takes around 90 days to ship Congo's intermediate cobalt product to China for refining, meaning the full impact of the February export ban is delayed. China's imports of Congolese cobalt remained robust at over 50,000 metric tons in both March and April. Moreover, the Chinese supply chain is still bloated from consecutive years of market surplus. Consultancy Benchmark Mineral Intelligence estimates stocks of cobalt outside Congo amounted to 8-10 months of global consumption in the second quarter of this year. Even with extended export controls by the world's largest producer, BMI reckons cobalt hydroxide stocks in China will only become physically low towards the end of next year. The shift by Chinese electric vehicle manufacturers away from cobalt chemistry is compounding over-supply. The country's consumption of cobalt sulphate by the battery cathode sector fell last year, according to analysis by Shanghai Metal Market compiled for the Cobalt Institute. And since DRC has only stopped exports not production, stocks of intermediate cobalt are also piling up in Congo. Cobalt's by-product status means Congo cannot easily follow the lead of Indonesia, which has started using mine quotas to limit production of nickel, another battery metal with bombed-out pricing. Any mining restrictions on Congo's cobalt producers would inevitably impact production of copper, which is currently in hot demand. The London Metal Exchange copper price is riding high at close to $9,900 per ton given tight markets for the raw material and refined metal. Chinese operators in Congo, such as CMOC Group ( opens new tab, have every incentive to keep digging as much copper out of the ground as possible. The cobalt comes free with it. Congo is the world's largest cobalt-producing country and CMOC is the largest producing company. With limited leeway to force companies such as CMOC or Glencore (GLEN.L), opens new tab to produce less cobalt without forfeiting copper revenues, the government has been considering an export quota system. Enforcing export quotas rather than the current blanket ban, however, would be operationally tricky and would not tackle the inventory accumulating in the country. The potential for a renewed flood of Congolese supply in the event of a policy change would weigh heavily on the cobalt price. The Congolese government looks set a long stand-off with the cobalt market and it is not even clear what price level it is targeting. If it aims too high, there is a risk it will accelerate cobalt's loss of market-share in the battery sector. Congo is finding out that controlling supply and controlling market price are two very different things, particularly when the other end of the cobalt supply chain is thousands of miles away in China. It could do worse than look at another Indonesian tactic, which is to link exports to commitments to build downstream processing capacity. Indonesia has successfully used this linkage in both the nickel and copper sectors, where two new smelters are firing up this year as a result of ever tighter controls over exports of copper concentrate. While Congo is likely to struggle to exert lasting control over the cobalt price, it can use its dominant supply position to determine where it sits in the supply chain. In itself, that will not solve the problem of over-production of what is a copper by-product, but it would mean more revenue for each pound of metal dug out of the country's rich resource base. The opinions expressed here are those of the author, a columnist for Reuters.
Business Insider
a day ago
- Business
- Business Insider
Trump Says U.S.-China Signed Trade-Related Deal, Chinese Stocks Jump
Chinese stocks are getting a lift in Thursday's after hours trading session after President Trump said that the U.S. signed a trade-related deal with China. Speaking at a White House megabill promotion event, Trump added that the deal was signed on Wednesday but did not provide any further details. Confident Investing Starts Here: Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter The deal could potentially involve more U.S. exports to China, a plan of action previously hinted at by Trump. In addition, export curbs on both sides could be eased. China Continues to Limit Rare Earth Exports Earlier this month, the two sides agreed to a framework agreement that would result in 55% tariffs on imported Chinese goods while China would tariff imported U.S. goods by 10%. However, China may still be limiting rare earth exports, which are crucial in the production of semiconductors, cars, and planes. That comes despite Beijing promising to ease rare earth curbs as part of the agreement. Chinese authorities have stalled on approving requests for rare-earth magnets from U.S. companies, according to the Wall Street Journal. 'Yes, the export restrictions have been paused on paper. However, ground reality is completely different,' said Benchmark Mineral Intelligence rare-earth analyst Neha Mukherjee.
Mint
2 days ago
- Business
- Mint
China is still choking exports of rare earths despite pact with US
Two weeks after China promised the U.S. it would ease the exports of rare-earth magnets, Chinese authorities are dragging out approval of Western companies' requests for the critical components, a situation that could reignite trade tensions between Washington and Beijing. Western companies say they are receiving barely enough magnets for their factories and have little visibility of future supplies. Firms are waiting weeks as Chinese authorities scrutinize their applications—only to be rejected in some cases. And applications for raw rare earths, which are used to make magnets, are rarely granted. As a result, Western companies are concerned that the shortages could soon affect manufacturing. Companies are so desperate for magnets that they are opting for expensive airfreight whenever licenses are granted to prevent costly production shutdowns. Some manufacturers are experimenting with workarounds that would allow them to make their products without the most powerful magnets. 'It's hand to mouth—the normal supply-chain scrambling that you have to do," said Lisa Drake, a vice president overseeing Ford's industrial planning for batteries and electric vehicles, earlier this week. Although she said the situation had improved, the scarcity of the rare-earth magnets is forcing Ford to 'move things around" to avoid factory shutdowns, she said. Manufacturers have taken the continuing challenges as a sign that new Chinese rare-earth export restrictions, introduced in April after President Trump raised tariffs on China, are here to stay—contrary to White House assertions that the flow of the critical components would return to normal. 'Yes, the export restrictions have been paused on paper. However, ground reality is completely different," said Neha Mukherjee, a rare-earths analyst at Benchmark Mineral Intelligence. The licensing process is plagued by 'bureaucratic drag." China's Ministry of Commerce said Thursday that it has been accelerating the review of rare-earth export license applications and has approved 'a certain number." The supply of rare minerals such as gadolinium is tightly controlled by China. The restrictions illustrate the power Beijing holds through its formidable supply chains and how it can use them to inflict pain on Western businesses and exact concessions from the U.S. China makes 90% of the world's most powerful rare-earth magnets, a key component in everything from cars to jet fighters. In April, after Trump heaped stiff tariffs on Chinese products, Beijing established an export-control system for rare earths. While it said the license system was set up to regulate the export of materials for military use, the regime has in effect allowed China to clamp down on rare-earths supplies as it wishes. After April, the supply of magnets to Western businesses slowed to a trickle, causing shock waves for global car, defense and electronics makers. Exports of rare-earth magnets to the U.S. declined 93% in May from a year earlier. Ford stopped production of its Explorer SUV at its Chicago plant for a week in May. The U.S. accused China of slow-walking the approval of export licenses, which China denied. The shortage drove both sides back to the bargaining table earlier this month, where China agreed to free up the flow of rare earths in exchange for the U.S. easing its own restrictions on certain U.S. exports to China. Following the deal, Trump wrote that 'full magnets, and any necessary rare earths, will be supplied up front by China." However, China put only a six-month limit on any new licenses, The Wall Street Journal has reported. Now, in the applications for export licenses, Chinese authorities are asking Western companies for sensitive details such as contact information of those buying their magnets and even designs of how their magnets are integrated into components like motors. Chinese authorities justify the scrutiny as necessary to ensure the magnets aren't used for military purposes, say companies involved in the magnet trade. The U.S. has accused China of slow-walking the approval of export licenses, which China has denied. When companies skip certain questions on their magnet applications to avoid disclosing sensitive intellectual property or details of commercial arrangements, their applications languish or are denied. In some cases, the applicants have then been told to start over and include all of the required information in a new application, which takes 45 days to process, according to companies involved in rare-earth imports. 'The control is real," said a representative of one such company. 'There are thousands of applications the [Chinese authorities have] received." Earlier this month, Germany's main industry association called on the country's new government to push China to ease the approval process. 'German industry needs to be able to plan in the near term. Licensing procedures must not be used as a means of exerting political pressure," it said. Beijing also appears to be trying to prevent stockpiling by Western businesses. One Chinese magnet maker has warned clients seeking to import more magnets than usual that they may have to explain to government officials the 'business drivers" behind such large orders, according to an advisory note the magnet maker shared with clients. Fearful of shortages, many Western businesses are complying with the information requests—but are still facing long delays. The success of their application also depends on their supplier. Big state-connected magnet companies are getting export licenses faster than smaller private ones, according to many in the industry. 'The export policy for magnet[s] is still very strict," said a representative for one Chinese magnet maker. Now, some Western businesses say they are resigned to the fact that the restrictions may remain in place indefinitely. Some private Chinese magnet makers, who are under significant financial pressure due to the export controls, are working with clients to find workarounds. For instance, some are encouraging foreign clients to buy less-powerful magnets that don't include any controlled rare earths. Some Chinese companies are also working to develop stronger magnets that don't rely on restricted materials such as dysprosium and terbium. But swapping out the most powerful and heat-resistant magnets is often impossible for the auto and electronics industries, which rely on magnets to efficiently power motors. Olive Lien, an expert in semiconductor-cooling technology based in Taiwan, said many companies in recent months have been struggling to acquire rare-earth magnets needed for some high-end fan motors used in products such as AI servers and other high-performance computing systems. Many companies have been forced to redesign their products, such as by switching to cheaper and more readily available ferrite magnets, which are less powerful. One U.S. magnet importer said that while two licensing applications he was involved with were recently approved, others are dragging. 'The system is slow and burdensome," he said. 'Very detailed and confusing for the applicants." When automobile-parts companies do get their licenses approved, they are paying extra to rush the magnets to factories by air, costs which are often ultimately borne by the carmakers. 'These are the things you don't hear about, how much money it is taking to keep these factories running, you know, limping along," the magnet importer said. Write to Jon Emont at
Reuters
20-06-2025
- Business
- Reuters
Copper smelters are facing both market and pricing crises
LONDON, June 20 (Reuters) - Copper smelters are now so desperate to find raw material they are paying miners for converting their concentrates into refined metal. So-called treatment and refining charges (TCRC) should be a core revenue stream for copper smelters but spot charges have been negative since the start of the year and the mid-year negotiations have also kicked off with a negative number. Low treatment charges feed copper's perennial bull narrative of too little mine supply but the current implosion in processing fees is as much about too much demand from too many new smelters. The imbalance looks unsustainable, particularly if smelters accept a negative charge for the mid-year talks, which set the price for much higher volumes than the spot market. But equally unsustainable is the copper industry's preference for pricing concentrates on an annual or semi-annual basis. The good news for smelters is that spot treatment charges appear to have stopped falling. The bad news is that they have done no more than stabilise at $-45 per ton (TC) and -4.5 cents per lb (RC) level, according to Benchmark Mineral Intelligence. Smelters which chose to lock in tonnages over the full year are partly insulated but this year's benchmark terms of $21.5 per ton were also the lowest in at least 20 years. The mid-year negotiations look likely to generate a still lower outcome, although smelters will understandably balk at locking in a negative TCRC for contracts that could run into 2026. Smelters have a couple of financial life-lines in the form of valuable by-products such as gold and silver. They also produce sulphuric acid, which has been rising sharply in price in China thanks to demand from the phosphate fertilizer industry. But a copper smelter's main source of income should really be copper, which is clearly not the case right now. It's not as if mines haven't been increasing production. Global output rose by 2.1% in 2023, 2.8% in 2024 and by another 1.2% in the first quarter of this year, according to the International Copper Study Group. China's imports of copper concentrates have been running strong, hitting a new annual high of 28.2 million tons bulk weight last year and up 7.5% year-on-year in the first four months of 2025. It's just that too much Chinese smelting capacity has been brought on line too quickly with newcomers chasing down available tonnage. Scrap is an alternative feed for some but this is an increasingly competitive market and Chinese imports of copper recyclable material are no more than flat so far this year relative to 2024. The rapid scale-up of Chinese processing capacity is clear to see in the country's production of refined metal. May output jumped by almost 14% year-on-year, according to the National Bureau of Statistics. Local data provider Shanghai Metal Market estimates production so far this year has grown by 11% over 2024 levels. A couple of Western smelters have already closed under the margin squeeze. Glencore (GLEN.L), opens new tab placed its Pasar smelter in the Philippines on care and maintenance in February. Sinomine did the same with its Tsumeb plant in Namibia earlier this month. But Chinese operators are doubling down in what appears to be a last-man-standing strategy. The world's mines are not going to be able to lift collective output by the same margin as China has increased smelting capacity. And the stresses in the raw materials supply chain are only going to get worse as new smelters fire up in Indonesia, ending the country's role as a key concentrates supplier to Asian smelters. Something will have to give, particularly since Chinese copper demand is expected to cool due to a scaling-back of subsidies for the over-heated solar panel sector. But with Chinese smelters not blinking, it could take some time before the current supply-demand imbalance is corrected through more capacity closures. That means more stress also on the industry's price discovery process, which is still rooted in annual deals. There has been some movement towards quarterly pricing and even spot pricing but largely in China. This, as smelters are finding out, is a big problem if the annual price is a negative number. A negative mid-year deal sets an ominous precedent. Markets such as iron ore have moved away from annual benchmarks which couldn't capture spot price volatility or sudden shifts in supply dynamics. Even lithium, widely perceived as too bespoke a commodity for standardised futures trading, can now be hedged on a liquid CME contract. It may be time for copper smelters to have a fundamental rethink about how they price their role in the processing chain. Because right now they're quite literally giving money away to the miners. The opinions expressed here are those of the author, a columnist for Reuters
Yahoo
10-06-2025
- Business
- Yahoo
Trump's second term is creating ‘a limbo moment' for US battery recyclers
In a recycling facility in Covington, Georgia, workers grind up dead batteries into a fine, dark powder. In the past, the factory shipped that powder, known in the battery recycling industry as black mass, overseas to refineries that extracted valuable metals like cobalt and nickel. But now it keeps the black mass on site and processes it to produce lithium carbonate, a critical ingredient for making new batteries to power electric vehicles and store energy on the grid. From Nevada to Arkansas, companies are racing to dig more lithium out of the ground to meet the clean energy sector's surging appetite. But this battery recycling facility, owned by Massachusetts-based Ascend Elements, is the first new lithium carbonate producer in the nation in years — and the only source of recycled lithium carbonate in North America. The company is finalizing upgrades to its Covington facility that will allow it to produce up to 3,000 metric tons of lithium carbonate per year beginning later this month. Right now, the only other domestic source of lithium carbonate is a small mine in Silver Peak, Nevada. Since January, President Donald Trump has taken a sledgehammer to the Biden administration's efforts to grow America's clean energy industry. The Trump administration has frozen grants and loans, hollowed out key agencies, and used executive action to stall renewable energy projects and reverse climate policies — often in legally dubious ways. At the same time, citing economic and national security reasons, Trump has sought to advance efforts to produce more critical minerals like lithium in the United States. That is exactly what the emerging lithium-ion battery recycling industry seeks to do, which is why some industry insiders are optimistic about their future under Trump. Nevertheless, U.S. battery recyclers face uncertainty due to fast-changing tariff policies, the prospect that Biden-era tax credits could be repealed by Congress as it seeks to slash federal spending, and signs that the clean energy manufacturing boom is fading. Battery recyclers are in 'a limbo moment,' said Beatrice Browning, a recycling expert at Benchmark Mineral Intelligence, which conducts market research for companies in the lithium-ion battery supply chain. They're 'waiting to see what the next steps are.' To transition off fossil fuels, the world needs a lot more big batteries that can power EVs and store renewable energy for use when the wind isn't blowing or the sun isn't shining. That need is already causing demand for the metals inside batteries to surge. Recycling end-of-life batteries — from electric cars, e-bikes, cell phones, and more — can provide metals to help meet this demand while reducing the need for destructive mining. It's already happening on a large scale in China, where most of the world's lithium-ion battery manufacturing takes place and where recyclers benefit from supportive government policies and a steady stream of manufacturing scrap. When the Biden administration attempted to onshore clean energy manufacturing, U.S. battery recyclers announced major expansion plans, propelled by government financing and other incentives. Under former president Joe Biden, the U.S. Department of Energy, or DOE, launched research and development initiatives to support battery recycling and awarded hundreds of millions of dollars in funding to firms seeking to expand operations. The DOE's Loan Program's Office also offered to lend nearly $2.5 billion to two battery recycling companies. The industry also benefited from tax credits established or enhanced by the 2022 Inflation Reduction Act, the centerpiece of Biden's climate agenda. In particular, the 45X advanced manufacturing production credit subsidizes domestic production of critical minerals, including those produced from recycled materials. For battery recyclers, the incentive 'has a direct bottom-line impact,' according to Roger Lin, VP of government affairs at Ascend Elements. The DOE didn't respond to Grist's request for comment on the status of Biden-era grants and loans for battery recycling. But recyclers report that at least some federal support is continuing under Trump. In 2022, Ascend Elements was awarded a $316 million DOE grant to help it construct a second battery recycling plant in Hopkinsville, Kentucky. That grant, which will go toward building capacity to make battery cathode precursor materials from recycled metals, 'is still active and still being executed on,' Lin told Grist, with minimal impact from the change in administration. Ascend Elements expects the plant to come online in late 2026. American Battery Technology Company, a Reno, Nevada-based battery materials firm, told a similar story. In December, the company finalized a $144 million DOE contract to support the construction of its second battery recycling facility, which will extract and refine battery-grade metals from manufacturing scrap and end-of-life batteries. That grant remains active with 'no changes' since Trump's inauguration, CEO Ryan Melsert told Grist. Yet another battery recycler, Cirba Solutions, recently learned that a $200 million DOE grant to help it construct a new battery recycling plant in Columbia, South Carolina, is moving forward. At full capacity, this facility is expected to produce enough battery-grade metals to supply half a million EVs a year. Cirba Solutions is also still spending funds from two earlier DOE grants, including a $75 million grant to expand a battery processing plant in Lancaster, Ohio. 'I think that we aligned very much to the priorities of the administration,' Danielle Spalding, VP of communications and public affairs at Cirba Solutions, told Grist. Those priorities include establishing the U.S. as 'the leading producer and processor of non-fuel minerals,' and taking steps to 'facilitate domestic mineral production to the maximum possible extent,' according to executive orders signed by Trump in January and March. Because critical minerals are used in many high-tech devices, including military weapons, the Trump administration appears to believe America's national security depends on controlling their supply chains. As battery recyclers were quick to note following Trump's inauguration, their industry can help. 'Critical minerals are central to creating a resilient energy economy in the U.S., and resource recovery and recycling companies will continue to play an important role in providing another domestic source of these materials,' Ajay Kochhar, CEO of the battery recycling firm Li-Cycle, wrote in a blog post reacting to one of Trump's executive orders on energy. Li-Cycle, which closed a $475 million loan with the DOE's Loan Programs Office in November but is now facing possible bankruptcy, didn't respond to Grist's request for comment. While Biden's approach to onshoring critical mineral production was rooted in various financial incentives, Trump has pursued the same goal using tariffs — and by attempting to fast-track new mines. Although economists have criticized Trump's indiscriminate and unpredictable application of tariffs, some battery recyclers are cautiously optimistic they will benefit from increased trade restrictions. In particular, recyclers see the escalating trade war with China — including recent limits on exports of various critical minerals to the U.S. — as further evidence that new domestic sources of these resources are needed. (China is the world's leading producer of most key battery metals.) 'There is a chance that limiting the amount that is being imported from China … could really strengthen' mineral production in other regions, including the U.S., Browning said. Trade restrictions between the U.S. and key partners outside of China could be more harmful. Today, Browning says, U.S. recyclers often sell the black mass they produce to refiners in South Korea, which don't produce enough domestically to meet their processing capacity and are paying a premium to secure material from abroad. Trump imposed 25 percent tariffs on Korean imports in April, before placing them on a 90-day pause. If South Korea were to implement retaliatory tariffs in response, it could cut off a key revenue stream for the U.S. industry. However, recycling companies Grist spoke noted that there are currently no export bans or tariffs affecting their black mass, and emphasized their plans to build up local refining capacity. 'The short answer is that we see the tariffs as an opportunity to focus on domestic manufacturing,' Spalding of Cirba Solutions said. While battery recyclers seem to align with Trump on critical minerals policy, and to some extent on trade, their interests diverge when it comes to energy policy. Without a clean energy manufacturing boom in the U.S., there would be far less need for battery recycling. Today, nearly 40 percent of the material available to battery recyclers in the U.S. is production scrap from battery gigafactories, according to data from Benchmark. Another 15 percent consists of used EV batteries that have reached the end of their lives or been recalled, while grid storage and micromobility batteries (such as e-bike batteries) account for 14 percent. The remaining third of the material available for processing is portable batteries, like those in consumer electronics. In the future, as more EVs reach the end of their lives, an even greater fraction of battery scrap will come from the clean energy sector. If a large number of planned battery and EV manufacturing facilities are canceled in the coming years — due to a repeal of Inflation Reduction Act tax incentives, a loss of federal funding, rising project costs, or perhaps all three — the recycling industry may have to scale back its ambitions, too. The budget bill that passed the House in May would undo a number of key Inflation Reduction Act provisions. Some clean energy tax credits, like the consumer EV tax credit, would be eliminated at the end of this year. The legislation was kinder to the 45X manufacturing credit, scheduling it to end in 2031 rather than the current phase-out date of 2032. But the bill could face significant changes in the Senate before heading to Trump's desk, possibly by July 4. Despite uncertainty over the fate of IRA tax credits, Trump's actions have already put a damper on U.S. manufacturing: Since January, firms have abandoned or delayed plans for $14 billion worth of U.S. clean energy projects, according to the clean tech advocacy group E2. While the battery recyclers Grist spoke with are putting on a brave face under Trump's second term, some are also looking to hedge their bets. As Ascend Elements ramps up lithium production in Georgia, it has lined up at least one buyer outside the battery supply chain. The battery industry accounts for nearly 90 percent of lithium demand globally, but the metal is also used in various industrial applications, including ceramics and glass making. Integrating into the EV battery supply chain remains 'the ultimate goal,' Lin told Grist. 'But we are looking at other plans to ensure … the economic viability of the operation continues.' This story was originally published by Grist with the headline Trump's second term is creating 'a limbo moment' for US battery recyclers on Jun 10, 2025.
