China has crushed the market 'critical minerals'

Billionaire Eileon described the critical metal mask as ‘new oil’ and complained about the ‘crazy’ price. The White House suggested that it provide subsidies and support to those who can increase its offer. Politicians in Europe have chased it, and they also promise to provide financial support for these projects. Just a few months ago, the possibility of a shortage of elements such as cobalt, lithium and some other few mineral concerns about the high prices of materials needed to make the batteries needed for the transformation in the energy field. However, the case is no longer. China has broken the market called critical minerals. Since its last highlight in 2022-2023, cobalt and lithium prices have dropped by more than 75% after the Chinese mining companies have increased their production to levels that have not been previously proposed. The cobalt, which has long been considered a commodity with the risk of permanent deficit, has become so plentiful that its price hangs near the lowest level in 20 years. The name of the critical minerals is no longer concerned about the shortage of supply, but we need to be careful, as low prices are not a guarantee of supply safety, as China currently dominates more than ever to produce cobalt and lehium, to improve its tremendous control over the necessary batteries for electric cars and other devices. Even worse, prices have fallen to the point that not -Chinese mining companies will have trouble making profits, reducing the incentive for Western investors to create their own sources for these two metal. The collapse of mineral prices and the growth of consumption represent the collapse of prices another blow against one of the most popular novels in the world of goods; It is that the transformation in the field of energy to clean electricity instead of fossil fuels makes the prices of these minerals inevitable. However, reality is much more complicated. It is clear that the transformation in the energy field means an increasing demand for certain goods, as the world needs millions of new performance batteries. While most mineral annual demand in demand experiences by 2% to 3%, Cobalt and Lithium were a growth in consumption by 10% to 20% annually. On the part of the question, critical minerals are the attention of the basic commodity sector. However, the offer also increased a great velocity. Cobalt metal is a detector model here. Glencore, a giant of goods listed in London, dominated for years in this market. But Chinese businesses followed them quickly to the Democratic Republic of Congo, with the largest cobal reserves in the world. There has been a Chinese company known today as ‘CMOC Group’, the production, which was possible during this short timeframe that many people believe in this industry. The surplus production is not affected by the fall in prices, the annual production in the global Cobalt market has reached about 230 thousand metric tons, as the ‘COOC Group’ group increased its production to more than 100 thousand tonnes from about 15 thousand tons five years ago. ‘CMOC group’ performed a rapid extension of the ‘tanks fungurumum’ and Kisanfu, the largest in the southern Republic of the Democratic Republic of Congo. During this process, the Chinese mining giant, which included among the shareholders in which the company, “Conmporary Amperex Tecnology”, has overcome the largest cobalt production company in the world, “Glencor”. It is not surprising that the shock of production overwhelmed demand, which led to the build -up of stock everywhere. Even most optimists believe that the consumption of surplus production will last between 18 and 24 months. The most careful observers talk in five years or even more. Why would it take a long time to restore the balance in the market? The production does not quickly respond to low prices, as in the usual commodity cycle of wealth to collapse? The problem is that cobalt is not a normal commodity. Almost no company does not delve in search of cobalt, but about 98% of the world’s production is a secondary product for copper and nickel mining operations. Consequently, the price of the cobalt is not affecting a real effect on production, but rather copper and nickel, and both draw an increase in prices sufficient to motivate mining companies to keep digging. As a result, low prices are not a treatment for the problem of surplus cobalt production. The result was the collapse of cobalt. From the last high that exceeded $ 80 per kilogram in the middle of -2022, prices have recently dropped to about $ 25, to the lowest level in two decades. Cobalt reached the lowest price for at least half a century, at the real value, adapted by inflation. Waiting until demand increases the supply to increase the best opportunity for the cobalt market is to wait with patience until the request is attached to the recent increase in the offer. It will not be reported that sales of electric cars have been disappointed so far this year except China, which reduces batteries demand. However, low commodity prices will certainly help to increase the request. The prices in the past two decades have made major engineering efforts to reduce the use of cobalt. The money spent on research and development has led to the development of new chemical formulas for batteries such as the “NMC 811” battery that fell to only 10% with cobalt content in the negative battery language, a 20% decline in the previous “NMC 622” batteries, or even 30% in the “NMC 523” batteries. At the current cobalt prices, research and development balances are aimed at other things, and the sector is not trying to reduce the use of the commodity. In fact, the opposite is true, as corporate executives tell me that they see signs of the return of the cobalt content in some batteries. Lithium walk on the Cobalt route, the lithium market follows a similar pattern, as Chinese businesses increased the offer very quickly until they flooded the market. It not only withdraws a more metal, but has also become very skilled in recycling old batteries, leading to an extra wave of width. The result was the same as it achieved in the cobalt metal, ie the collapse of the market. Standard lithium prices have dropped to about $ 11,000 per metric tons, a decline of the last peak, which amounted to about $ 70,000 per tonne in the early 2023. As is the case with many other commodities, China has made a bubble in critical minerals. The domestic batteries demand was so strong, and its dominance in the supply chain was so great that many rushed outside China to store cobalt and lehium, driven by pessimistic warnings of US and European policymakers. For a short period, the demand level is overwhelmed. But what China did, she also canceled it. She rushed with all his power to increase the offer, and the result was a major collapse. But do not be fooled at low prices now, although it may not rise at any time, the absolute dominance of China on critical minerals poses a clear and continuous threat to the future production of batteries needed to keep the world away from fossil fuels.