Apple Inc. plans to buy cobalt directly, fears shortage
The US-based electronics giant Apple wants to buy the much-needed cobalt metal directly from miners for the first time. The company is seeking to ensure it will have enough of the key battery ingredient amid industry fears of a shortage driven by the electric vehicle boom, wrote Bloomberg.
Cobalt is one of the most important metals used for batteries, but its supply has been volatile, as were the prices. One of the biggest suppliers of this rare metal is the politically unstable Democratic Republic of Congo, which intends to increase the taxes on this metal, thus likely driving the price higher. You can read more here.
The iPhone maker is one of the world’s largest end users of cobalt for the batteries in its gadgets, but until now it has left the business of buying the metal to the companies that make its batteries. According to Bloomberg, Apple is now seeking contracts to secure several thousand metric tons of cobalt a year for five years or longer, according to one of the people, declining to be named as the discussions are confidential. Its first discussions on cobalt deals with miners were more than a year ago, and it may end up deciding not to go ahead with any deal, another person said.
The move means Apple will find itself in competition with carmakers and battery producers to lock up cobalt supplies. Companies from BMW AG and Volkswagen AG to Samsung SDI Co. are racing to sign multiyear cobalt contracts to ensure they have sufficient supplies of the metal to meet ambitious targets for electric vehicle production.
Cobalt is an essential ingredient in lithium-ion batteries for smartphones. While those devices use about eight grams of refined cobalt, the battery for an electric car requires over 1,000 times more. Apple has around 1.3 billion existing devices, while Apple Chief Executive Officer Tim Cook has been bullish about the prospects for electric vehicles.
The price of cobalt has more than tripled in the past 18 months to trade above $80,000 a metric ton. Two-thirds of supplies come from the Democratic Republic of Congo, where there has never been a peaceful transition of power and child labor is still used in parts of the mining industry.