First Cobalt Corp (CVE:FCC) (OTCQX:FTSSF) has said it is confident that cobalt will remain a critical material in electric vehicle battery production for at least another ten years, despite Tesla’s Battery Day proclamation that it will produce cobalt-free batteries.
In a statement, First Cobalt CEO Trent Mell called Tesla’s decision to manufacture its own batteries a “harbinger of things to come” for the electric vehicle industry.
Responding to the highly-anticipated Battery Day staged by the electric vehicles (EV) manufacturer on Tuesday, Mell said that the company’s move to build its batteries in-house was a warning to other EV companies on the strategic importance of controlling supply chains.
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“If you don't control your battery technology and raw materials supply chain, you will get left behind,” Mell told shareholders. “Simply put, the supply of EVs will grow too quickly for mines, refiners and cell manufacturers to keep up and there will be casualties as established automotive companies move towards an electric future.”
Toronto-based First Cobalt owns North America’s only permitted cobalt refinery as well as advanced cobalt assets in Canada and the US.
Tesla’s plan to lower the cost of its batteries means making them with cobalt-free cathodes, a fact the company emphasized at Tuesday’s event. The news could shake up the cobalt sector, which has depended on growing demand for electric vehicle batteries to buttress commodity prices.
First Cobalt’s Mell isn’t fazed, however. “Despite years of trying to remove cobalt from batteries, it has proven to be a formidable challenge owing to its importance in keeping batteries safe and extending the life of cells,” the CEO told investors.
“We remain steadfast in our belief that cobalt will continue to be an essential component in nickel-rich batteries,” Mell said, citing the lengthy timeline from concept to commercialization of any new battery technology and recent market commentary on Tesla having concluded a long-term cobalt supply deal, which would be at odds with today's pronouncements.”
Cobalt still essential
Leading cobalt market expert Caspar Rawles from Benchmark Mineral Intelligence tweeted yesterday following Tesla’s announcement there will be “no electric vehicle industry without cobalt."
There will be no electric vehicle industry without cobalt— Caspar Rawles (@CDMRawles) September 22, 2020
The vertically-integrated mineral company cheered Tesla’s decision to develop a North American battery supply chain. North America currently relies on foreign sources of cobalt for its automotive industry. With the only permitted cobalt refinery, First Cobalt is well-positioned to become a key player in the supply chain.
The firm is recommissioning and expanding its permitted cobalt refinery in Canada to provide battery-grade cobalt for the North American and European electric vehicle markets. Discussions are ongoing with several EV manufacturers, according to the company.
Longer-term, the company said it may expand the refinery to recycle black mass from lithium-ion batteries.
For now, CEO Mell said that cobalt will continue to play an “essential role” in long-range vehicles, validating the company’s business model.
“Contrary to speculation, cobalt will not be taken out of the battery anytime soon, reinforcing our business plan,” Mell concluded. “The evolution of battery technology towards lower cobalt content is positive from the perspective of EV penetration rates and for cobalt as a critical input.”
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