ERG bullish on market prospects

Benedikt Sobotka, chief executive officer of ERG, attends the CCTV Young Leaders Roundtable sub-forum during the 2017 Boao Forum for Asia Annual Conference in Boao, South China's Hainan province, March 23, 2017. [Photo/IC]

Eurasian Resources Group, the international metals and mining company, said it is bullish on its prospects in the China market, given the explosive growth of electric vehicles, which is expected to boost demand for metals like lithium, cobalt, copper and nickel.

Benedikt Sobotka, chief executive officer of ERG, said: "We believe the cobalt market still has a fantastic potential. We expect to see a strong primary uptrend in the next few years as China is currently the world's biggest importer for raw cobalt products."

ERG is well positioned to become one of the largest suppliers of cobalt to China starting from next year. An expected 80 to 90 percent of the company's cobalt output will be sold to China around 2025 compared with about 40 percent now, he said.

Part of it will be sourced from the Democratic Republic of the Congo where ERG's affiliate Metalkol SA signed a contract with Foreign Engineering and Construction Co Ltd, a subsidiary of China Nonferrous Metal Industry, for expanding Metalkol's mine project in the country.

Upon expansion, Metalkol at full capacity will be able to supply up to 21,000 metric tons of cobalt annually to the global market. That amount of cobalt will be able to build 2.6 million electric vehicles.

ERG said it is also eyeing cooperation with automobile companies in the country, so as to step up battery production to further serve the booming new energy vehicle sector.

Industry insiders in China believe the growing electric vehicle market has driven up demand for some metals and the trend is expected to continue.

"Electric vehicles will play an increasingly important role in the demand for metals, including cobalt, lithium and nickel for batteries, copper for charging stations and aluminum for lightweight auto bodies," said Zhu Yi, senior analyst of metals and mining at Bloomberg Intelligence.

"Metals producers and downstream customers such as automakers are aggressively investing in mines to secure stable raw material supplies."

The market has priced in the booming demand from e-vehicles at a pretty early stage and it is expected that their real commissioning may happen in another 5-10 years, once mass production starts, Zhu said.

According to Sobotka, while the penetration of e-vehicles in China is comparatively lower than that of the developed countries like Norway, the large size of the market could mean the future demand for the metal will be substantial.

China, which has the largest number of e-vehicle manufacturers worldwide and the largest network of charging points, has set a goal of selling 2 million new energy cars a year by 2020. "We are at the beginning of the revolution," he said.