Glencore takes stake in UK battery developer Britishvolt; agrees long-term cobalt supply deal

Glencore announced this week that it has entered into a long-term strategic partnership with UK-based lithium ion cell project developer, Britishvolt, for the supply of cobalt to its planned 30 GWh battery facility, currently under development in Blyth, UK.

As part of the deal, leading cobalt producer Glencore made an undisclosed investment to secure a stake in Britishvolt — its second strategic investment in a European cell developer.

The company announced a similar equity and supply deal in February this year with Norwegian battery start-up Freyr and will supply cobalt to its planned battery operations in Mo i Rana, Norway.

Unusually for the battery supply chain it was revealed that the cobalt supply agreement with Freyr would be for cut cathode from its Nikkelverk operation in Norway. Cut cathode is a form of cobalt metal not usually associated with use in batteries, as it has an extended dissolution time compared with other forms of metal such a briquettes or broken cathode, and is typically destined for the superalloy or industrial sectors.

While specific details of the agreement with Britishvolt remain largely limited, the announcement notably mentioned Glencore’s support for the battery producer’s recycling ambitions.

The focus on recycling may indicate that the deal with Britishvolt could also include some volumes of metal from Nikkelverk, as a substantial portion of the cobalt units are sourced from recycled lithium ion batteries via Glencore’s Canadian nickel operations

But why take a position in the two battery start-ups at all?

Glencore is an upstream producer and could simply offer a standard supply agreement without taking equity. Perhaps it is speculating on one of the many investment opportunities the energy transition offers while improving the ESG credentials of Glencore’s investment portfolio, or perhaps there are also other synergies that helped to trigger the investments.

The investment in Britishvolt and the focus on recycling within its press release could indicate a move by Glencore to expand its battery recycling operations outside of North America and into Europe.

While a wave of spent batteries, which contain much needed volumes of cobalt, nickel, and other battery minerals, is on its way to recyclers, it remains some time away, with expectations that lithium ion batteries will spend 10 years or more in use before being recycled.

Prior to large volumes of spent cells returning from retired EVs, the main feed for early recycling operations is expected to be battery scrap — offcuts and off-spec waste material produced in large quantities — particularly in the early years of new lithium ion battery cell production facilities.

While this is speculation, if offtake rights to battery scrap were included in the investment agreement, and should Britishvolt be successful in building out its cell plant ambitions, this would give Glencore access to a source of cobalt and nickel local to European automakers, free of sourcing concerns, and provide them with an early feedstock with which to build out further recycling operations.

With significant deficits forecasted in both the cobalt and nickel markets over the coming decade, the future supply chain is dependent on the recycling of end-of-life batteries to make up some of the supply deficit.

With early success in its recycling operations in North America, Glencore may be looking to capitalise on its progress and to expand into Europe, locking up feed supply through investments and offtake deals.

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