Glencore (GLEN-L), as well as some other miners, see EVs (electric vehicles) causing a disruption in metal markets. Several leading miners are looking for assets to position themselves as suppliers to the EV market. Mining companies are looking at cobalt, lithium, and copper assets to strengthen their asset base. Copper has attracted mining companies including BHP Billiton (BHP) and Rio Tinto (RIO) given the expected supply deficit.
Looking at Glencore’s portfolio, the company is the largest zinc miner. It sees zinc demand getting a boost from higher galvanized steel use in electric vehicles. It’s too early to comment on higher zinc usage as a result of vehicle electrification. Steel and aluminum companies would like their chances as the global automotive industry takes to EVs in a big way.
Copper and cobalt
Copper demand could get a lift as a result of vehicle electrification. Glencore has high-quality and low-cost copper assets that position it to capture the expected growth in copper demand. Cobalt has concerned automakers. Cobalt mining is concentrated in the Congo, which can be politically volatile at times. Recently, Reuters reported that Volkswagen was in talks with suppliers like Glencore and Freeport-McMoRan (FCX) to secure long-term cobalt supply.
Ivan Glasenberg, Glencore’s CEO, said, “Cobalt is definitely the electric vehicle story.” He also noted “the supply side is very sparse because it is a byproduct mainly of copper, nickel. You cannot mine cobalt on its own. So, we believe there will be a shortage of supply of cobalt going forward as and when the electric vehicle story unfolds.”
In response to a question, Glasenberg said, “the world will have to find the battery electric vehicles is as big as people believe it’s going to be, they will have to find a better solution than just relying on cobalt.”
Next, we’ll see what Glencore had to say on its dividend policy (EWU) (UKX-INDEX).