Apple Securing Supply of Key Ingredient in Its Batteries, Cobalt

Relying on anonymous sources, Bloomberg reports that Apple is in talks to buy long-term supplies of the metal.

Citing "people familiar with the matter", the report said the Cupertino giant is looking into buying more cobalt to ensure it will have enough of the key battery ingredient, in a move that sounds like it's scared its all going to run out.

Industry sources said Apple had spoken to miners such as Glencore, a top producer, which said late last year it would produce around 39,000 tonnes of cobalt this year.

There is a growing demand for the mineral coming from electric cars which run on lithium ion batteries, but now around 25% of cobalt production is bought by smartphone companies. 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.

On it's part, Apple declined to comment on the issue. The company has been reported to have purchased Cobalt for batteries, with child labor being employed to do the mining bits.

Cobalt prices went ballistic a year ago, with the metal quoted on the London Metal Exchange ending 2017 at $75,500 per tonne, a 129 percent annual surge sparked by intensifying supply fears and an expected demand spike from battery markets.

The automobile sector has certainly pushed up the demand for cobalt, but it has not peaked yet, according to Darton Commodities, which specializes in the sale of cobalt. Auto makers like BMW and Volkswagen are also looking to ink multi-year deals that would secure a constant flow of the rare metal. Apple has around 1.3 billion existing devices, while Apple Chief Executive Officer Tim Cook has been bullish about the prospects for electric vehicles.

In 2014, Apple first started mapping the cobalt supply chain, according to a 2016 Supplier Responsibility report.

More than 60 percent of cobalt is found in the Democratic Republic of Congo (DRC) in Africa, but more than half of the world's refined company chemicals that are used to build the batteries comes from China, according to a separate Bloomberg article from October.

Cobalt prices have risen three-fold in the past 18 months to more than $80,000 per metric tonne.

  • Fernando Stephens