Published on July 27th, 2018 | by Carolyn Fortuna0
Stolen! Thieves Exit Warehouse With Cobalt Worth Almost $10 Million
July 27th, 2018 by Carolyn Fortuna
About 112 metric tons of cobalt worth nearly $10 million was stolen from a warehouse in Rotterdam, the Netherlands, owned by Vollers Group GmbH in early July 2018. Stored in drums, the cobalt was situated in a secure area of the warehouse. The explosion in cobalt prices over the past two years has made the metal enticing for thieves, with cobalt running about $82,500 per ton, according to pricing data from Metal Bulletin at the time of the theft. Cobalt is a key component of lithium-ion batteries, and the battery industry uses more than 40% of the world’s cobalt supply.
The price of cobalt has risen more than 100% since 2016, mainly thanks to the surge in demand from electric carmakers. Analysts are projecting that usage of cobalt — a key part of lithium-ion batteries — will continue to increase as automakers like Tesla promote electric cars. According to Metal Bulletin, cobalt prices remain up 133% compared with 18 months ago, over which time they have found support from strong demand, anticipated battery sector uptake, and a tight supply outlook. (Note: We contacted Metal Bulletin for the price today for cobalt but haven’t heard back from their analysts.)
Approximately 97% of the world’s supply of cobalt comes as a by-product of nickel or copper nickel mining, and only a few places produce meaningful quantities. 60% of the world’s cobalt reserves and resources originate in the Democratic Republic of Congo (DRC), which is plagued with child labor and exploitation.
According to Amnesty International, Congolese cobalt miners in these artisanal mines work in dangerous, narrow, underground tunnels handling hazardous minerals without basic safety or protective equipment. Children as young as 7 work alongside adults for up to 12 hours a day, sorting minerals and carrying heavy loads in exchange for the equivalent of $1.00–$2.00. DRC governmental authorities ignore children’s and worker safety in general, and traders and companies that purchase these ores turn a proverbial blind eye to the conditions in which the cobalt has been extracted.
Likely Victim of Cobalt Theft was Cobalt 27
One entity holding the metal in the Rotterdam cobalt warehouse where the theft occurred is Cobalt 27 Capital Corp., a prominent investment firm set up by Anthony Milewski. Bloomberg BusinessWeek relates how, in 2015, backed by a Russian billionaire, Milewski started buying metal from mining companies and putting it in warehouses. Cobalt, like many other metals, was inexpensive at the time because most industrial commodities were stuck in long slumps. Today, Cobalt 27 holds almost 3,000 metric tons, the largest private stockpile on the planet. (Note: The government holdings in China do exceed Cobalt 27’s.) Prices have since quadrupled, making their inventory worth about $250 million.
Cobalt 27 is all about cobalt: “Cobalt 27 is building an asset base underpinned by physical cobalt material, cobalt and nickel streams, royalties and interests in mineral properties containing cobalt,” their website states. (Milewski declined a Bloomberg request to learn if it was, indeed, their cobalt worth almost $10 million that was robbed, and, if so, how Cobalt 27 was affected.)
Corporate filings show the large majority of Cobalt 27’s 2,900-ton holdings is stored in Rotterdam warehouses run by C. Steinweg Group, which specializes in logistics for the metal industry. Cobalt 27 holds 100 tons of metal in Vollers depots in the port and has insurance on all of the metal it holds, filings show.
Tesla’s Cobalt Consumption
Tesla has been working for years to reduce its dependence on cobalt. For the Model S, Tesla has been using high energy density nickel-cobalt-aluminium-based (NCA) battery cells sourced from Panasonic. Tesla has long been a proponent of nickel-cobalt-aluminium (NCA) batteries developed by Panasonic in Japan, which goes against the propensity of a nickel-cobalt-manganese (NCM)-focused EV industry, but that still meant Tesla’s first Model S consumed on average 11 kg of cobalt per vehicle. Today, using a fixed pack size for a more accurate comparison, Tesla’s Model 3 would consume 4.5 kg per vehicle.
Tesla has also been trying to remove cobalt from the equation entirely and add nickel instead. In June, 2018, Tesla CEO Elon Musk revealed a company plan to achieve a 0% cobalt contribution to its lithium ion batteries for all-electric vehicles in the near future. About a month later, Panasonic concurred, saying that, as the exclusive battery cell supplier for Tesla, it was moving toward cobalt-free batteries “in 2 to 3 years.” Not knowing the extent of global cobalt supply is a genuine point of concern and a potential bottleneck for much greater mass production of EV batteries. For this and other reasons, Panasonic has already significantly reduced cobalt content to about 10% in its nickel-cobalt-aluminium (NCA) cathode chemistry.
We use less than 3% cobalt in our batteries & will use none in next gen
— Elon Musk (@elonmusk) June 13, 2018
Panasonic, the exclusive supplier of batteries to Tesla, also has concerns that cobalt delivered to the company was mined in Cuba. As a result, the electronics manufacturer has suspended business with Canadian energy producer Sherritt International Corp. Cuba produces 550% more cobalt than the US and owns the third-largest total cobalt reserves worldwide. The tiny island nation produced 4,200 metric tons (MT) of cobalt in 2017 and held reserves of 500,000 MT.
Cobalt Worth Almost $10 Million? Why Is Cobalt Now So Valuable?
Cobalt is a hard metallic element with low thermal and electrical conductivity. The unique properties of cobalt and cobalt products are responsible for its extensive applications in energy storage. Cobalt,
- has the ability to alloy and impart strength at high temperatures;
- has ferromagnetic properties — it can be magnetized;
- can be alloyed with many different metals; and,
- has high-energy density, which is the amount of energy stored in a given mass of a substance or system.
Prices have risen more than threefold since early 2016 and were trading at a decade-high in April. Part of the rally has been driven by traders and investors stockpiling metal to take advantage of rising prices.
2008 Cobalt Heist of 20 Tons Remembered
It’s not the first time cobalt has attracted criminal attention. Back in late 2008, Belgian police arrested a gang who stole 20 tons of cobalt metal from Vollers warehouses in Antwerp, filings in a related court case show. One of those charged, an employee of a transportation company that worked with Vollers, confessed that he’d locked himself in the warehouse and disabled the alarm, and over six hours removed the metal with a bulldozer, according to court documents filed in London.
Vollers is adding security measures after the theft and working with Dutch police and insurers, while the Minor Metals Trade Association said. “Additional monitoring and security have been implemented since the discovery of the theft, and Vollers are working closely with police and insurers,” a Metals Trade Association (MMTA) notice to members said.