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October 9, 2019

Glencore signs five-year cobalt supply deal with China’s GEM

British-Swiss multinational Glencore has signed a five year deal with Chinese company GEM Co to supply a minimum of 61,200 tonnes of cobalt per year for five years starting from 2020.

By Jack Unwin

British-Swiss multinational Glencore has signed a five-year deal with Chinese company GEM to supply a minimum of 61,200 tonnes of cobalt per year starting from 2020. The fee for the deal was not disclosed by either party.

Glencore head of marketing, copper & cobalt Nico Paraskevas said: “The extension of our long-established partnership with GEM further endorses Glencore’s important role in supplying the materials that enable the energy and mobility transition.

“Furthermore, this long term partnership provides Glencore with a stable outlet for a significant portion of its expected future Cobalt Hydroxide production.”

GEM chairman Xu Kaihua added: “GEM is very pleased to announce this long-term strategic co-operation with Glencore. This agreement represents a major cornerstone in GEM’s cobalt sourcing strategy as it will support GEM’s continued contribution to the Chinese New Energy Market.

“By securing a key battery raw material, GEM clearly demonstrates its ability to implement and deliver its vision for an electrified, carbon-free transportation system.

“GEM will continue focusing on the development and the manufacturing of high-quality sustainable cobalt products to meet the fast-growing demand for cobalt-containing battery products. We truly appreciate Glencore’s long term approach and its support in establishing a stable and sustainable cobalt supply chain.”

Following the announcement of the deal, Glencore’s stock price fell from 226.65p to 224.60p on the London stock exchange, giving the company a market cap of £30.27bn. This has continued a recent downward trend for Glencore since April 2019, as its share price peaked at 340.30p on 17 April.

Glencore share price in 2019


GEM’s stock price remained stable on the Shenzen stock exchange at CNY4.46 a share. Although the company’s share price has generally risen since starting 2019 at CNY3.85, it has fallen from a peak of CNY5.64 on 8 April.

Glencore

Glencore is one of the leading natural resource companies in the world, producing and selling 90 different commodities.

The deal with GEM is not the first major cobalt supply deal that Glencore has entered into this year. In May 2019 it agreed to supply Umicore with cobalt for its sustainable batteries.

GEM

Founded in 2001 and based in Shenzen, GEM is a well-established electronic equipment recycling company.

According to GlobalData, GEM Co’s revenue has risen year on year from $562m in 2013 to $2.1bn in 2018. Its net income (profit) has also grown from $23m to $110m in the same period.

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