The LME's annual industry event returned over Oct. 11-15 after a fallow year enforced by the coronavirus pandemic, while contract talks began after 10 months of battery raw material commodity prices surging across the board…Cobalt offers bullish…Sellers are keen to start selling cobalt hydroxide basis the mid-point of prices, moving off the low-point, which has historically been where contracts and spot sales have been negotiated from…Platts assessed 99.8% Co metal at $26.60-$27.20/lb IW Europe Oct. 19, up 20 cents/lb week on week for spot cargoes aligned to Platts methodology, loading in 15-60 days. This price started the year 60% lower at $15.90/lb when using the mid-point…There is appetite for a cobalt hydroxide hedging mechanism. Cobalt metal has been trading on the LME's rival the CME, but this does not allow for the perfect hedge, market participants have reported…A cobalt hydroxide contract is anticipated to help attract tap interest from Asia, the largest consuming market for cobalt hydroxide…The power cuts in China came as no surprise, according to several market participants…It could create bottlenecks, given that demand for electric vehicles will not be impacted by the electricity cuts. Raw materials consumption may slow, given the power rationing…It is still largely seen as a wait-and-see topic by the cobalt market.

Domestic LCO output rose significantly in the first half of this year on robust demand from the smartphone and computer industries but demand softened in the second half from a shortage of semiconductors, prompting LCO producers to reduce output. The Chinese government has intensified its restrictions on energy consumption since August, with LCO producers forced to cut production to comply with the policy…Total phone shipments reached 227mn during January-August, up by 12.3pc year-on-year, with 5G phone shipments of 168mn rising by 79.7pc over the same period, accounting for 74.1pc of China's domestic market, according to data from the China Academy of Information and Communications Technology…China is the largest LCO production hub in the world, with output of nearly 79,000t in 2020, up by around 35pc from a year earlier and accounting for 75pc of global total production.

The European Commission has brushed off industry criticism that the upcoming EU battery regulation could raise the cost of electric vehicles, arguing that prices will fall thanks to increased manufacturing capacity ushered in by EU policies…A recent position paper released by the European Automobile Manufacturers’ Association (ACEA) warned that the myriad requirements in the proposed regulation would increase administrative costs and “undermine the efforts currently underway to improve the affordability of electrified vehicles for European citizens”…ACEA further argue that the wide-reaching regulation could lead to “a slowdown of the electrification process”, harming Europe’s ability to reach its climate targets…But James Copping, a policy officer with the European Commission’s internal market directorate (DG GROW), said EU legislation will make batteries cheaper by ramping up production and increasing supply…“We expect battery cost to fall, particularly with the massive investment that’s going into new technologies and the ramp up in production, which, with economies of scale, will make batteries cheaper,” he said at a EURACTIV event on 13 October…According to Keynes, quickly adopting environmental standards for battery manufacturing will allow European companies to get “a foot up” on foreign manufacturers, giving them a competitive edge in the global marketplace…The new regulation seeks to make European batteries the greenest in the world by setting carbon emissions limits on production, obliging manufacturers to use recycled content, and imposing checks to prevent labour abuses in the battery supply chain…While broadly welcomed by the raw materials industry, a common complaint is that the proposal includes short deadlines for implementation, which will be hard to meet in practice…Adam McCarthy, the president of the Cobalt Institute, an industry association, argued that a balance should be struck between realism and recognising the urgency that the climate crisis demands. “We do need ambition in the regulation to really drive the potential change, but I think we also have to be realistic that we can’t change systems overnight,” he said…Currently the EU is heavily reliant on third countries for the raw materials needed to produce batteries, with cobalt primarily sourced from Africa and lithium from South America…To stem the EU’s reliance on imports and bolster the bloc’s “strategic autonomy” over the battery supply chain, the EU aims to source growing quantities of raw materials from within the bloc’s borders…In addition, the EU has sought to strike deals with neighbouring countries such as Ukraine and Western Balkan nations for raw materials sourcing…But the cobalt industry contends that complete EU strategic autonomy over these raw materials is unlikely, with countries including the Democratic Republic of the Congo certain to play an important role in the supply of earth metals in the future…“Whilst there is ambition to seek to source materials from as diverse a background as possible, we can’t unfortunately change geology,” said Adam McCarthy…“We will still be reliant upon certain supplies of our natural materials including cobalt from places like the DRC and I think our challenge is then to ensure we get that supply in a way that is both responsible and sustainable, but also transparent.”

Almost every week, another major automaker announces a billion-dollar-plus investment in battery manufacturing, and with it, thousands of new American jobs…Why it matters: Eyeing President Biden's climate agenda, carmakers are racing to create a domestic battery supply chain to support their aggressive rollout of electric vehicles by the end of the decade…They want to avoid another crisis like the current semiconductor shortage, which forced them to slash vehicle production because they can't get enough computer chips from Asia…Driving the news: This week, Toyota and Stellantis (Chrysler and Jeep's parent) joined the chorus of automakers planning to build giant battery factories in North America…The moves follow other U.S. battery manufacturing commitments, by Ford and General Motors, as well as Korean battery suppliers SK Innovation and LG Chem…By the numbers: Americans purchase about 17 million vehicles a year, and Biden's goal is for half of them to be electric by 2030…Each 30-gigawatt battery factory is enough to power about 300,000 vehicles, notes Kristin Dziczek, vice president at the Center for Automotive Research…That means it would take at least 30 battery factories — employing about 2,000 workers each — to meet Biden's 50% target (not accounting for the fact that half of cars sold in the U.S. are imported.)…There are a total of 19 existing or planned cell manufacturing plants in the U.S., but not all of them are on the scale of Tesla's gigafactory in Nevada…Among those sounding the alarm is Tesla co-founder J.B. Straubel, who said on a recent podcast that automakers' ambitions to go all-electric ignore the complex realities of EV production…"I don’t think they’ve done the math fully [on] what that entails on the supply chain and tracing it all the way back, literally all the way back to the mines," said Straubel, who is CEO of battery recycler and cathode manufacturer Redwood Materials…"You need to do that, or else, you know, you haven’t really solved it."…"It has the feeling to me of kind of like a giant overbooked flight. All these people are like, ‘Oh, this is great. We’re all gonna go to that new place. ... Let’s all get on the plane and go'," without building the aircraft, the runway or the air traffic control system…The big picture: Automakers jumped into electric vehicle production with both feet in 2021, especially in North America and Europe…Globally, the industry plans to spend $330 billion on EVs, up 40% from last year, notes Alix Partners, which tracks investments on a five-year rolling basis…What's new is the effort to build battery cells in-house, instead of importing them from Asia, said John Loehr, a managing director in the consulting firm's automotive and industrial practice.

A union-affiliated pension fund advisor said it is pressing Rivian on human rights and environment concerns in the electric vehicle startup's battery supply chain ahead of its expected blockbuster initial public offering…SOC Investment Group, in a letter sent Wednesday to Rivian board member Rose Marcario, called on the Irvine, California-based company to "commit to a rigorous human rights assessment of Rivian and its value chain" before it finalizes the S-1 document with U.S. regulators for its IPO. SOC provided a copy of the letter to Reuters…"Failure to address potential human rights abuses and environmental harms associated with the battery life cycle exposes Rivian to significant regulatory, litigation and reputational risks," SOC Executive Director Dieter Waizenegger said in the letter, calling on Rivian to respond by Nov. 3…As issues of environmental, social and corporate governance take on growing important with investors, automakers have come under pressure to prove that such minerals as lithium and cobalt for their electric vehicles batteries are sourced without human rights abuses…In the past, Tesla Chief Executive Elon Musk has expressed his desire to eliminate the use of cobalt from the EV leader's batteries because of the financial and reputation risk of a metal associated with child labor and poor safety conditions at artisanal mines in the Democratic Republic of Congo, the world's dominant producer…SOC called on Rivian to adopt policies to identify and prevent human rights risks and environmental impacts through its supply chain based on United Nations guiding principles for businesses…It also wants Rivian to publicly support a moratorium on deep-seabed mining, adopt a policy not to buy minerals from the deep seabed, designate a board committee with responsibility for oversight of these issues and report annually to investors on the company's efforts…"Working with materials suppliers and supply chain partners on ethical sourcing practices is a critical piece of that," the company said in a statement. "As we've laid out in our IPO filing documents, we're committed to responsible environmental, social, and governance practices and that includes thorough reporting and disclosure.”…Rivian is nearing an IPO in the coming weeks that could attract a valuation of about $80 billion and raise between $5 billion and $8 billion for the company. Its pre-IPO investors include Ford Motor Co, Amazon.com, T. Rowe Price and BlackRock…He also said such automakers as Ford and Daimler AG have made commitments to protect human rights and the environment. In addition, AB Volvo and BMW have backed a call for a moratorium on deep-sea mining…"Investors are playing an increasingly active role in due diligence around the world, particularly in companies driving the energy transition," he said.

Tesla Inc. said it’s shifting to cheaper lithium-iron-phosphate batteries globally, a move away from the chemistry used to power most electric cars as prices for key materials soar. The switch to LFP batteries will apply to Tesla’s standard-range vehicles, the company said in its third-quarter earnings release, confirming a strategy flagged last year to use the budget components to deliver lower-cost models…Most of the auto industry relies on nickel and cobalt in lithium-ion batteries to boost electric car performance. Yet supplies of both materials are constrained, and ethical issues have long dogged cobalt mines in the Democratic Republic of the Congo, the top supplier. Nickel, which helps provide power and range, is also prone to fire, a risk the industry is spending billions to control…Tesla has been using LFP batteries in China supplied by Contemporary Amperex Technology Co., the world’s largest battery maker. Though the batteries, which are cheaper and more stable than alternatives, have in the past lacked the energy density -- a key factor for electric cars -- that’s quickly changing…At Tesla’s Battery Day last September, Elon Musk flagged the firm could look to use LFP components for lower-cost models, a nickel-manganese based chemistry for long-range cars and a high-nickel chemistry for the harder working Semi and Cybertruck.

Tesla is changing the battery cell chemistry that it uses in its standard range vehicles, the automaker said Wednesday in its third-quarter investor deck…The new batteries will use a lithium-iron-phosphate (LFP) chemistry rather than nickel-cobalt-aluminum which Tesla will continue to use in its longer-range vehicles…The move is likely a way for Tesla to increase profit margins on its fully electric cars, while not necessarily having to raise vehicle prices. In the past, Tesla has been criticized for sporadic vehicle price changes...China generally promotes the use of this type of battery, according to materials researcher and consultant Roskill. The firm notes that around 95% of LFP cathode manufacturing is produced in China…“LFP has both positive and negative trade-offs,” said Sam Abuelsamid, Guidehouse Insights principal analyst. “It’s significantly cheaper and doesn’t require any nickel or cobalt. It’s also more stable, which makes it safer.”…One major downside: The cells are less energy-dense, which means they offer lower range for the same weight as other cells. Cold weather also affects them more, Abuelsamid said…Abuelsamid believes Tesla’s change is “probably a smart idea because they probably aren’t go to lower prices so it will likely boost their bottom line.”…Other automakers such as Ford Motor and Volkswagen have expressed interest in the battery chemistry for lower-priced models, according to Abuelsamid.