| August 05, 2009 The New LME Cobalt Contract Publisher: MetalMiner Author: Stuart Burns | |
| The New LME Cobalt Contract August 5th, 2009 The LME is due to launch their Cobalt contract shortly. Cobalt and molybdenum will be the first new metals introduced onto the exchange since steel last year but may bear more of a resemblance to aluminum introduced in 1978 or nickel in 1979. When those metals were launched there was considerable resistance from the industry. The producers in particular resented the threat to their "right" to set a market price, the producer price, and felt the volatility would be damaging for everyone. Cobalt has met no such resistance. The LME has worked to garner wide support from producers, consumers and the trade, and have largely been successful. The contract specifications at 99.3% purity and higher in industry consumed forms such as cathode, briquettes and powder, and traded in one ton lots packed in drums mean contracts are directly applicable to what the industry uses. Delivery points will be Rotterdam, Baltimore and Singapore according to a report given to the recent Lisbon Cobalt conference given by the LME so there is a good geographic spread for suppliers and consumers looking to take or make physical delivery. Cobalt is not a volume product. Only some 60,000 tons per annum are traded worldwide according to the Cobalt Development Institute website. The biggest concern was whether sufficient liquidity could be generated to establish a price that was fair and representative of true supply and demand. Some comfort has been taken by the success of the Credit Suisse and Glencore Cobalt Index which has proved to be well accepted and free from manipulation. In some respects, the size of the market and limited number of players is itself a barrier to manipulation. As one industry insider commented to us, if any party takes up a sizable position on the exchange they are at considerable risk if they have to unload quickly. The cobalt market will not be as liquid as copper or aluminum. Large positions cannot be built up without the exchange authorities getting sight of it and more importantly cannot be unloaded quickly. There will just not be enough buyers to sell to. Furthermore markets like cobalt are not beyond physical manipulation anyway as happened with the Zambian market in the early 90's. Indeed the chances of physical manipulation are probably higher than on a futures exchange. Others are concerned that a futures exchange will introduce more speculators into what has been a relatively minor and almost totally physical market up to now. It's true to say the major market makers will want to see greater volatility, that's when they traditionally make their money, but the market cannot exactly be said to have been dormant over the last few years even without a futures market. The price has displayed all the volatility seen in other base and minor metals throughout this decade and will likely continue to do so with or without the LME. What the exchange will provide is a more transparent price, hitherto the industry has relied largely on the Metal Bulletin price which is believed by many to have been distorted in the past and is not widely respected by market players. Although the new market will allow producers and consumers to hedge their forward sales and purchases, the greatest beneficiaries will probably be the smaller processors in between who will be able to hedge the exposure on their work in process. This folio management should significantly reduce the risk smaller players will face, allowing them to lock in their profit and making the processing market generally more efficient. So the new contract looks like it should be well received when it comes to the market next year. We will watch with interest how it is taken up by market players and the degree to which industry participants feel it strengthens their risk management strategies. Stuart Burns -END- | |
| July 22, 2009 Formation Capital Gets Ever Closer to Production at the Idaho Cobalt Project, In Spite of the Actions of Xstrata Publisher: Minesite.com Author: Charles Wyatt | |
| Formation Capital Gets Ever Closer To Production At The Idaho Cobalt Project, In Spite Of The Actions Of Xstrata By Charles Wyatt Mick Davis asserted during his after-dinner speech to the Melbourne Mining Club at Lords Cricket Ground that Xstrata gives maximum autonomy to its operations around the world. But there is a danger that this can prove to be a two-edged weapon. Back in 2002 Xstrata closed the Windimurra vanadium mine in Western Australia where it was in a joint venture with Precious Metals Australia. Bad enough to have to close a mine with all the redundancies that implies, but the major also started to dismantle the plant without the agreement of its partner. Roderick Smith, who was running Precious Metals at the time, fought back through the courts and managed to stop Xstrata from removing the kiln and a lot of other equipment. He also came away with a cheque for A$24 million. That equipment, worth several hundred million dollars, was key to subsequent attempts to resuscitate the mine, which got underway in 2008. It is impossible to know if Xstrata's head office was asked if the plant should be dismantled, or whether the decision was taken independently at a local level. But dismantling the plant would hardly be disadvantageous to Xstrata, given that it also produces vanadium in South Africa, and product from that operation would be more likely to fetch a higher price if Windimurra vanadium was unlikely to hit the market any time soon. It's perhaps more likely that the local management made its own decision, but Mick Davis would certainly have known about it when he had to sign a cheque for A$24 million. Autonomy is a great thing, but local managers still have to be kept on a strong leash. And fast forward to 2009, and a similar thing seems to be happening in Idaho, only this time round the bill could be even higher if it can be proved that the local management is in breach of anti-trust law. Anti-trust law in the States is pretty lethal. It was created to prevent monopolies and break up giant corporations like Standard Oil. The philosophy behind the laws is that trusts and monopolies can cause markets to stagnate by preventing others from engaging in healthy market competition. The fines can be mind-boggling, so it is difficult to understand why Xstrata US is tempting fate by trying to prevent the Canadian-listed company Formation Capital getting access to its Idaho cobalt project, other than to say that the Idaho project will be the first primary producer of the metal in the States. Xstrata is the minority partner in the old Blackbird minesite, which lies close to the Idaho cobalt project, and which is undergoing restoration and through which Formation Capital needs access. In January of this year the US Department of Agriculture, US Forest Service handed down a Record Of Decision which meant that the cobalt project could go ahead. But appeal against that decision was lodged three months later by Xstrata, despite the fact that Rio Tinto, the majority partner in Blackbird, decided not to join in. Such an action seems mighty strange, until one remembers that Xstrata owns the Nikkelverk refinery at Kristiansand in Norway which has the capacity to process 86,000 tonnes of nickel, 39,000 tonnes of copper cathodes and 5,200 tonnes of cobalt annually. Most of that cobalt is sold to the US where it is considered to be a strategic material. The view is that cobalt is a commodity whose lack of availability during a national emergency would seriously affect the economic, industrial, and defensive capability of the US. Until the Idaho cobalt project comes into production the US will be importing virtually all its cobalt requirements, and a goodly slice of that is coming from Nikkelverk. When the Idaho cobalt project gets into production it should be producing 1,525 tonnes per year of super-alloy grade high purity cobalt metal for a minimum mine life of ten years. Not hard to see why somebody somewhere might think they were doing a big favour for Mick Davis, sitting safe and sound back in Zug in Switzerland, by holding up development at the Idaho project as long as possible. The anticipated level of production at Idaho is equal to 3.3 per cent of the entire global cobalt supply and it will be able to meet no less than 15 per cent of the North American demand for cobalt. As the Idaho project would be on home territory it does not require a brain surgeon to deduce that those 1,525 tonnes per year will be sold at home and US import requirements will fall by that amount. Should be plenty to go round, one might think, as the US only consumes 20 per cent of world production, but that may not be how it appears to someone somewhere along the chain of command who's trying to make an impression in Zug. This hold up is yet another frustration for Mari-Ann Green, chief executive of Formation Capital, and she has encountered plenty of these in her efforts to bring the cobalt mine into production. How ironic then that it is another mining company that is chuntering on about environmental impact rather than the usual band of tree huggers. They have actually been won over by Mari-Ann who has gone out of her way to counter every objection by explaining exactly what the project involves. Her policy of meeting every problem head-on has taken the Idaho cobalt project to the point where funding is the next big hurdle to be crossed. According to Mari-Ann, plenty of interest is being shown by financiers and talks are in progress about a number of funding methods, including partnerships and off-take agreements, debt and equity. The aim is still to start construction this autumn and it will take a year after that before production is ready to start. Women usually get what they want in the end, so Mick Davis's minions would be best advised to step aside. -END- | |
| July 16, 2009 Cobalt targets higher prices Publisher: Metal-Pages | |
| LONDON (Metal-Pages) 16-Jul-09. The rally in cobalt prices is showing no signs of abating yet, and the market took heart from the decision by China's Jinchuan Group to raise prices for its materials midweek. Asia's largest producer hiked its website prices for both cobalt and nickel this week. It is currently offering Rmb 335,000/tonne ($22.29/lb) for 99.8% cobalt metal, up from Rmb 310,000/tonne ($20.62/lb) which had been in place since 3 July. Nickel has meanwhile made some cautious gains on the LME, with an eye on copper, which is trading higher and in backwardation, and on the strike at Vale Inco's nickel mine in Sudbury, which began this week. Market sources said that Jinchuan Group has informed customers that it is planning to shut down for maintenance in August, in a move linked to supply shortage of raw material, although the company has been reluctant to comment on production plans. The producer is due to receive intermediary feedstock, cobalt hydroxide, from the Tenke Fungurume mine in the Demoratic Republic of Congo towards the third quarter of the year. In the meantime prices for cobalt concentrates in the spot market are being reported upwards of $ 13/lb. There are still opportunities for arbitrage to China, with domestic metal prices at a premium to western markets, but business has been active and prices going up also in the western. Prices for high grade cobalt breached through $ 19/lb in Europe towards the end of the week, and some small business for Falconbrige material was reported above $ 20/lb in the US. Zambian material and 99.6% grade was reported trading close to $ 18/lb, with 99.3% cobalt trading between $ 17/lb and $ 17.75/lb. Japan has emerged back into the market recently, and is retendering for metal for the stake stockpile, having failed to conclude purchases at satisfactory prices last month. -END- | |
| July 13, 2009 BNN Interviews President of Equities and Economics Report Publisher: BNN Author: Interviewer: Amanda Lang | |
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- For the Information of Shareholders and Interested Parties Only - Dear Shareholder/Interested Party, The image below provides a link to an interview on July 10, 2009, with Victor Goncalves, President of Equities & Economics Report (www.enereport.com), by BNN's Amanda Lang. At the 4 minute mark, Mr. Goncales resopnds to an email enquiry regarding Formation Capital Corporation and its Idaho Cobalt Project.
 Click Here for BNN Interviews Victor Goncales of Equities & Economics Report Formation Capital Corporation | |
| June 10, 2009 Illegal Mining of Cobalt in the Congo Publisher: CNBC Author: Erin Burnett | |
Click on image below to view CNBC's story on the illegal mining of cobalt - "Cobalt and the Congo - Dollars and Danger" Formation Capital Corporation's Idaho Cobalt Project is expected to supply North America with a stable source of cobalt offsetting the current reliance the United States has on foreign sources such as the Congo. Once in production, the ICP will be the sole primary cobalt producer in the Western Hemisphere. The Company trades on the Toronto Stock Exchange under the symbol FCO. The link to CNBC's report is also provided here below: http://www.cnbc.com/id/15840232?video=1148104078&play=1 | |
| June 02, 2009 Canada could become big player in electric cars industry, says Magna Publisher: The Canadian Press Author: Julian Beltrame | |
| OTTAWA - Magna International Inc. chairman Frank Stronach says he wants to start mass-producing electric cars in Canada within three years. The head of Canada's largest auto parts maker was in Ottawa on Tuesday seeking government support for his new electric vehicle venture after Magna cemented a deal with General Motors Corp. to acquire the U.S. automaker's money-losing Opel car brand in Europe. Unveiling the fully electric compact that Magna developed in partnership with Ford Motor Co. (NYSE: F), Stronach said he is being courted by the U.S. and Europe but he wants his first electric cars to come off a Canadian assembly line. "We are very serious, we have a serious commitment," he told reporters. "I would like to see that the first electric car facilities are in Canada. If we would get a loan at a reasonable rate, we know we could speed it up, we would make sure it will be in Canada." If successful, an electric car assembly operation in Canada would provide badly needed jobs in a troubled industry and help the global parts giant cash in on the growing demand for low-pollution vehicles in the marketplace over the next few years. Toyota, with its Prius, and Honda, with its new Insight, already have hybrid electric-gasoline cars, and General Motors plans to mass produce its new Volt fully electric vehicle at a U.S. plant and get them into dealer showrooms by the end of 2010. The world's former No. 1 auto maker filed for bankruptcy protection on Monday - the largest ever for an industrial company - and said it hopes to move forward with just four core brands - Chevrolet, Cadillac, Buick and GMC. It also plans a spate of new fuel-efficient and low-polluting models, including the Volt, a critical piece of GM's vehicle lineup for the future. GM experimented but failed with electric cars in the past. However, the Volt is seen as a sure-fire winner by the Detroit company, especially in a future market of younger buyers worried about soaring gasoline prices and greenhouse gas emissions. The Volt is an extended-range all electric vehicle with a powerful battery pack that uses cutting-edge lithium-ion technology. The vehicle also has a small gasoline engine to replenish the battery power when it gets low, not to drive the car. Stronach said he believes within six years about 15 per cent of cars sold will be electric or the hybrid variety, with the percentage doubling by 2021. An official with the Aurora, Ont. parts maker, which employs 74,000 people in 25 countries, said the model being developed with Ford is aiming for a 160-kilometre range without recharging. Magna (TSX: MG-A.TO) is putting in about $300 million into the project and is seeking low-interest loans from the federal government for about half the total cost. But Stronach came to Ottawa without any guarantee he would be seeing Prime Minister Stephen Harper, although he said he hoped to arrange a meeting. The electric vehicle is a major step by Magna to diversify its business away from auto parts, a sector hit hard by the slump in GM, Ford and Chrysler, Magna's main customers. Besides electric vehicles, Austrian-born Stronach wants to expand Magna's vehicle assembly operations and use the Opel deal to boost sales to Russia, which could soon become Europe's largest car market and help Magna decrease its dependence on North America. Magna has also been looking to other customers like Volkswagen, BMW and Toyota. Saturday's Opel deal calls for Magna to take a 20 per cent stake in the German company and for state-controlled Russian lender Sberbank to take a 35 per cent stake, giving their consortium a majority. GM will keep 35 per cent, while the remaining 10 per cent will go to Opel employees. The Magna chairman appeared less certain about whether any of Opel's European-based manufacturing plants would be transferred to Canada, suggesting a sticking point is an agreement with GM not to sell Opels in the U.S. market. Last week, Stronach said he wants to build Opels in Canada, but although he repeated that wish Tuesday, he suggested availability to the larger U.S. market is essential before the company could make that commitment to manufacture in Canada. "I'm very optimistic we can sit down and work out concepts and structures which would be beneficial to GM and to Magna and also to Canada," he added. Stronach described the global auto market as extremely competitive, but said he believes the Opel unit will break even in three years and turn a profit in four years. In another matter, he called the massive bailouts of GM and Chrysler as necessary, given the jobs at stake and that the car companies were adversely impacted by the global recession. "If it were only the car industry and the rest of the world economy was functioning, then it wouldn't have been right to bail out the car companies," he said. "But if they had gone bankrupt and were sold in bits and pieces, the spinoff effects would have been a few million jobs (lost) between Canada and the United States." Stronach, whose company runs mostly non-union plants, said he has one major concern over what he called the "confrontational culture" that exists between management and unions in the North American auto sector. He said that culture has greatly handicapped the industry. -END- | |
| March 30, 2009 China's '09 cobalt demand to rise 3-4 pct -- refiner Publisher: Reuters Author: Polly Yam | |
| Wed Mar 25, 2009 5:49am EDT By Polly Yam HONG KONG, March 25 (Reuters) - China's consumption of cobalt is expected to rise at least 3-4 percent this year because of strong demand from cellphone batteries, even though demand from other sectors may fall in the face of the global economic slowdown, an official at a refiner said on Wednesday. But output may fall this year as low prices are discouraging producers from running full rates, which could cut exports from China, the world's top producer and consumer of cobalt. China consumed 5.3 percent more cobalt at 13,519 tonnes last year, nearly a quarter of world demand, said Yang Zhai, marketing manager at Zhejiang Huayou Cobalt Co Ltd. "Consumption should rise by more than 3-4 percent as demand from cellphones increases, particularly with the development of the 3G," Zhai told Reuters at the sidelines of a minor metals conference in Hong Kong. Production of lithium cobalt oxide, which is used in batteries for cellphones, would rise by more than 5 percent this year from 5,478 tonnes last year, he predicted. That demand had taken up nearly half of China's cobalt consumption. To develop China's new third generation (3G) mobile networks, the government has estimated that the country's three telecom carriers would spend $58.5 billion over the next three years. [ID:nPEK22716] With the expansion in 3G networks, ZTE Corp (0763.HK)(000063.SZ), the world's sixth largest cellphone maker, aims to raise revenue by a double-digit percentage this year. [ID:nHKG280880] Zhai said cobalt demand from the production of a catalyst, which was used in an oil product called purified terephthalic acid (PTA), would rise as oil prices stablised. Demand from the sector, which accounted for 6 percent of the country's total consumption of cobalt, fell 29 percent to 950 tonnes last year due to sharp falls in oil prices. FALLING OUTPUT But production of cobalt may fall this year from 20,000 tonnes last year, a third of the world's output, as producers have slowed or shut production on weak prices of the metal, Zhai said. He estimated about 6,000 tonnes of cobalt stocks had been carried to this year. Spot refined cobalt with purity more than 99.6 percent traded at about 305,000 yuan per tonne in Shanghai on Wednesday, down 63 percent from a year earlier but up 9 percent this year. Spot cobalt cathode COB-CATH-LON in London is trading around $16 per pound, down from more than $46 in the first half of last year. China would continue to rely on imported material as feed for the production of refined cathode as local mines produced about only 1,000 of metal this year, he said. But the firm would increase refined cobalt production to up to 3,600 tonnes this year from 2,800 tonnes last year after it boosted capacity by two-thirds to 5,000 tonnes a year, Zhai said. -END- | |
| March 18, 2009 Xstrata opposes Formation Capital cobalt project on environmental grounds Publisher: Northern Miner Author: Kip Keen | |
| Vancouver - Rarely do mining companies make headlines for objecting to a competitor's mine development based on its potential environmental impact. But in a strange twist to the saga of Formation Capital's (FCO-T, FCACF-O) environmental approval process of its Idaho cobalt project (ICP) - where the company has been able to bring onside environmental groups and First Nations with commitments not to oppose the project - Xstrata (XSRAF-O, XTA-L) has become one of only two objectors to the U.S. Forest Service's positive record of decision on the project's environmental impact statement through an ongoing appeal process. The other appeal came from an individual named Charles Pace. The dispute is one between neighbours over the potential impact of the ICP on local waterways that has reached the point of Formation Capital alleging Xstrata may be trying to block the development of the ICP to protect the Swiss-based major's near-monopoly on the global high-purity cobalt market of which Formation Capital says Xstrata controls 85%. But Xstrata maintains it is only protecting its interests next door to the ICP at the past-producing Blackbird mine - an EPA Superfund site - where, along with a Rio Tinto (RTP-N, RIO-L) subsidiary, it has spent over US$70 million on remediation through three of its wholly owned subsidiaries: Noranda Mining, Noranda Exploration and Blackbird Mining. The Blackbird site also happens to be downstream of the ICP and Xstrata says it doesn't believe that Formation Capital's environmental impact statement addresses Xstrata's concerns that it could end up being on the hook to clean-up potential pollution from the ICP. The ICP, located 45-km west of Salmon, Idaho, would be an underground mine, with proven and probable reserves of 2.6 million tonnes grading 0.559% cobalt, 0.596% copper and 0.4 gram gold per tonne, and provide ore to Formation Capital's hydrometallurgical facility 250-km away near Kellog, Idaho, where the company would produce about 1,525 tonnes of high-purity cobalt per year, making them direct competitors to Xstrata. Dominique Dionne, Xstrata vice-president of corporate affairs in the company's Toronto-based nickel division, tasked with responding to Formation Capital's allegations following The Northern Miner's inquiries to one of its attorneys in Idaho, says the appeal is not intended to prevent the ICP from proceeding. "It is intended to protect the money that has been spent, more than US$70 million, by Noranda and others, to remediate the Blackbird mine and the streams in that area," she says. "The streams and the water quality and the fish populations and the waterways have been re-established, so that's a done deal. The appeal is really to protect that, in the view of the potential impact of any new development on these waterways." But E.R. Honsinger, Formation Capital vice-president corporate communications, suspects Xstrata may have ulterior motives. He notes that the other major stakeholder at Blackbird has not appealed the record of decision and, further, that it and Formation Capital are working out any potential issues through talks. "I think the environmental record (of decision) speaks for itself," he says. "We spent a lot of time working on this and there is virtually no environmental opposition to this project because we've done everything we can to mitigate any of those concerns." He argues Xstrata does not "have any environmental legs to stand on" as regards the issue of potential downstream impacts. Not only have local groups, including the Idaho Conservation League and a First Nation band, agreed not to oppose the mine's development, Honsinger notes, but the U.S. Forest Service has signed-off affirmatively on its environmental impact statement. "The only thing we can read between the lines here is that it would appear that through (Xstrata's) actions that they are (a) either using us as a potential soapbox to try and get out of all of their cleanup responsibilities or (b) they're trying to corner the market, the cobalt high-purity market." Dionne declined to respond to those allegations. Honsinger, noting current troubles in the Democratic Republic of Congo where Xstrata operates, theorizes that part of the problem in getting a resolution to the dispute may also be that Xstrata "has bigger fish to fry". But he says: "They should be aware of what's going on down in this smaller 'minion here of Salmon, Idaho. And it just doesn't appear to be the case." Back at Xstrata, however, Dionne defends the company's stance on the ICP. She explains that Xstrata only wants to make sure Formation Capital's environmental impact statement explicitly addresses potential impacts to the Blackbird property and she says the company is not fundamentally opposed to there being a new cobalt mine next door. Putting it bluntly she says the ICP's environmental impact statement as it currently stands would not protect Xstrata and its subsidiaries at Blackbird from potential problems upstream. "The thing is, the way it's been done now, we would be exposed," she argues. Both parties state a desire to resolve the matter through negotiation but Honsinger and Dionne relate discordant accounts as to how much of an effort the companies have made to resolve the cross-fence dispute. Dionne says there have been several meetings and constant conference calls with Formation Capital. "We've been working with them and our only interest is to protect the $70 million that has been spent on this," she says. But Dionne's description of regular contact between the companies incenses Honsinger who stresses that he would like nothing more than to meet and resolve the issue with Xstrata but that Formation Capital's calls to the Major have gone unanswered. It's why Formation Capital is making the matter as public as it is, he says. "Their contact with us has been extremely limited," Honsinger says, adding, "Their legal counsels' filing of appeals and so on has been extensive." As for the appeals, Kimberley Nelson, the U.S. Forest Service ranger currently overseeing their assessment, says the U.S. Forest service will announce its decision regarding them on April 30 after the regional forester receives her department's recommendations. Dionne says Xstrata is seeking meetings with the U.S. Forest Service and the U.S. Environmental Protection Agency (EPA) "to make sure that there will be a distinction between the historical effects of the mining and the new impacts that could take place on the waterways." Her understanding at this point is that the meetings have been requested "and we're waiting on that," she says. But, while the U.S. Forest Service considers the appeals, Xstrata's influence, or Formation Capital's for that matter, will be limited. "We do not consult with them during the appeal process," Nelson says. Thus at this point the resolution ultimately appears to be out of either company's hands. -END- | |
| February 16, 2009 EPA issues permit for ID cobalt mine project Publisher: Associated Press | |
| A Canadian company proposing to mine high-purity cobalt from a mountain in central Idaho now has the federal permit required to discharge treated wastewater into a tributary of the Salmon River. The Environmental Protection Agency issued the permit this week [see Formation Capital News Release Feb 11, 2009] for the Idaho Cobalt Project, planned on public land mined off-and-on since the late 1800s for cobalt, silver and copper. Securing the discharge permit was a major federal step for Formation Capital Corp., the Vancouver, B.C.-based company seeking to open the first domestic cobalt mining operations in decades. "The receipt of this permit is a substantial milestone," said Guy Jeske, general manager for the Idaho Cobalt Project. "The terms and conditions of the permit are consistent with what we expected and we have no doubt that we can comply." The company anticipates extracting from two underground shafts as much as 1,600 tons annually of high-grade cobalt, a key component in the construction of jet airplane engines and batteries for hybrid and electric vehicles. The proposed mine is located in the Salmon-Challis National Forest, 22 miles west of Salmon, on land partially shared with the historic Blackbird Mine, the site of a federal Superfund cleanup and blamed for destroying salmon runs along a tributary of the Upper Salmon River watershed. The company expects to mine for at least 10 years, hire about 150 full-time employees and add about $15 million each year into the state and local economies. -END- | |
| February 05, 2009 Boom in battery sector anticipated Publisher: Metal Pages | |
| LONDON (Metal-Pages) 03-Feb-09. In spite of the global economic downturn and dearth of sales in the automobile sector there are reports that a boom in the battery sector is expected with the prospect of a strong growth in sales of electric cars. As a result electronics companies are making vast investments in battery plants. Leading Japanese electronics companies such as Toshiba and GS Yuasa have announced plans for new battery plants, although the industry is cutting capital investment overall. Ryoji Chubachi, President of Sony announced a list of factory closures, but the one area where he promised growth was batteries. "Nobody wants to be left out and nobody wants to lose existing market share," said Donald Saxman, an analyst at BCC Research. Fuji Keizai, a research company, expects the market for rechargeable lithium-ion batteries to more than double to ¥1,255 billion ($14bn) between 2007 and 2012, and the overall battery market to grow by some 37 percent. Industry analysts give three reasons for this. First is the growth in mobile devices, from laptop computers to Apple's iPhone. The second is the "green" drive for hybrid or fully electric cars, all of which will need a large battery, and the third is the potential use of batteries to store renewable energy generated by turbines when the wind blows, or solar panels when it is sunny, and then release it as conditions require. But of these, the general opinion is that electric cars will be the main source of demand in the future. "We are on the cusp of mass production now, that is why there is a sense of urgency," said Ravi Krishnaswamy of consultants Frost & Sullivan. Recent investments in battery production have been made between a car manufacturer and a battery specialist, for example GS Yuasa is going to launch a joint venture with Honda and there are reports that Nec and Nissan may increase the investment in their battery joint venture by ¥100 billion by 2012. Hybrid electric cars such as the Toyota Prius use nickel-metal hydride batteries but investments now are for lithium-ion batteries, which are smaller and lighter relative to the amount of energy stored, are expected to power fully electric cars in the future. Panasonic's recent ¥807 billion takeover bid for Japanese rival Sanyo Electric is thought to be because Panasonic wishes to have access to Sanyo's lithium-ion battery business, the world leader in the industry. So many companies are trying to get into the market, however, that there are doubts whether all of them can succeed. "The most successful companies are typically existing lithium battery companies," said Mr Saxman. Sanyo believes that all carmakers will want at least two battery suppliers in order to reduce risk. It says that its proved technology, customer relationships and global manufacturing base will give it an advantage over ventures part-owned by rival carmakers. Sanyo already plans to invest ¥80bn by 2015 and with Panasonic in the driving seat this may be increased. Krishnaswamy of Frost & Sullivan says Japanese and South Korean producers are well ahead, but US companies are trying to catch up. Last month, A123 Systems, a US battery maker, applied for $ 1.84bn in US government loans to build a lithium-ion plant. In spite of Toshiba pulling out of the lithium-ion battery market in 2004, it has now decided to start mass production in 2010 which analysts expect to cost several hundred million dollars. Since leaving the battery sector, Toshiba has not stop its battery research and says the decision reflects its confidence in a new technology called SCiB, which it claims is not only safer and longer lasting than other lithium-ion batteries, but can also reach up to 90 percent of its full charge in as little as five minutes. In December 2007, Toshiba announced the general commercial launch of a 4.2 Ah cell version of its fast-charging SCiB---Super Charge ion Battery---lithium-ion battery and is developing a 3.0 Ah high-power version of the cell specifically for hybrid electric vehicle (HEV) applications. -END- | |
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