[ferro-alloys.com]The electric vehicle sector is weathering the storm fomented by the coronavirus pandemic better than internal combustion engine vehicles, as automakers are forced to take a step back and re-evaluate their long-term strategies, with a potentially positive upshot for cobalt and copper demand, an executive at a member of the Global Battery Alliance (GBA) said Tuesday.

"Although these are distressing times, it is also a chance to restructure supply chains and take more decisive steps towards embracing electric vehicles," Benedikt Sobotka, GBA Co-Chair and CEO of diversified miner Eurasian Resources Group, said in an email.

Even while automakers throughout Europe have been at a standstill in recent weeks due to measures taken to curb the spread of the pandemic, EV penetration rates are rising across many countries, Sobotka said. In the UK, EVs reached a penetration rate of 7% in March, Germany set a new record at 9% and France reaching a plug-in EV penetration rate of 12%, he said.

"The same pattern is evident in many other countries. In Portugal, Tesla's Model 3 became the second best-selling car in March, just behind the Mercedes-Benz A-Class, and in Italy – one of the countries worst affected by the COVID-19 pandemic – electric vehicle sales are also at record high levels," the executive said.

The GBA, founded in 2017, comprises around 70 public and private sector organizations that aim to collaborate on establishing a sustainable battery value chain. Other members include miners Glencore and Anglo American, carmakers Volvo and Honda Motors, trader Trafigura and technology giant Google.

POSITIVE SENTIMENT ON COBALT

A "growing appetite" for EVs is evidenced by continued positive sentiment surrounding the metals most in demand for the lithium-ion batteries used in EVs and related infrastructure, according to the GBA executive. Cobalt, as of Monday, continued to trade slightly higher than at the beginning of the year, unlike many other metals that have seen double-digit percentage price drops over the same period, while, after a sharp fall in the second half of March, copper prices are back on an upward trend, trading above the $5,000/mt mark, he said.

GOVERNMENTS STILL PROMOTING ELECTRIFICATION

While there is not yet full clarity around incentives for the uptake of EVs, governments appear eager to continue to promote the electrification of transportation, according to Sobotka.

China's State Grid recently announced the construction of 78,000 new charging points in 2020, and analysts estimate that about 200,000 public charging points and 400,000 private charging points could be constructed across China this year, with a total investment of $1.4 billion. Crucially, China's new EV purchase subsidies are expected to be extended for two years, although details have yet to be published, he said.

In the EU – the world's second largest EV market – meanwhile, governments continue to promote electric mobility and bloc-wide carbon dioxide emissions targets remain in place.

"For governments, it may make sense to use a crisis of these proportions to speed up a change which is already viewed as inevitable," he said.

Matthew Chamberlain, CEO of the London Metal Exchange, told S&P Global Platts in an interview Tuesday that he sees no evidence that the coronavirus crisis has slowed down the adoption of environmental, social and governance (ESG) standards, both in the mining and energy transition areas. Indeed, he expects "society to come out of this feeling more strongly about ESG than before ... looking at how to embed ESG principles into our supply chains."

"Energy transition will be hugely important as we come out of this," Chamberlain said.

COPPER SUPPLY DISRUPTION

Copper's recent price upturn is mainly due to supply disruptions, according to Sobotka, who expects around 1.8% of 2020 mine supply to be lost as a result of temporary coronavirus-related mine closures and cutbacks to date, equivalent to almost 400,000 mt. However, if these disruptions continue until the end of April, that would increase the supply loss to 500,000 mt, and to 900,000 mt if they continue to the end of May, he said.

Pandemic and price-related factors could potentially lead to a copper mine supply loss of over 10% in 2020, or more than 2 million mt, he said. Adding to this, falling copper inventories in China and current indications of a tightness in copper scrap – which typically accounts for one third of global copper supplies – could push copper prices back to their pre-coronavirus levels of over $6,000/mt, according to Sobotka.

(S&P Global Platts)

• [Editor:王可]