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Cobalt Crisis and Lithium Batteries—What You Need to Know

Cobalt prices are skyrocketing, and the demand for this once unpopular metal is rapidly increasing. The uses for cobalt used to be limited to producing alloys for gas turbines and jet engines. However, recent tech advances in battery technology have now made this metal one of the most highly sought after element in the industry, and it is all for a good reason.

Lithium Batteries are Dependent on Cobalt

Cobalt was discovered by Swedish chemist George Brandt in 1739. It’s a by-product of nickel and copper mining. Later on, cobalt was used as a cathode material of Lithium-ion batteries that we use today. The ever increasing demand for lithium batteries is driving prices up. Just from the previous year, the price for cobalt has more than doubled as said by the United States Geological Survey.


Manufacturers are looking for alternatives, but the need for the metal in batteries can’t be eliminated. Engineers are capable of finding options for elements or change the design of specific technologies, but cobalt in lithium-ion batteries are difficult to replace as the possible substitutes for the metal can cause a decrease in performance of the battery. According to CEO of Umicore Marc Grynberg, there is no better element to make the battery stable than cobalt. The idea of phasing out cobalt for battery technology won’t be possible in the next three decades or so.

Supply and Demand

To better understand the cobalt issue, it is necessary to know the demand volume. Batteries account for 42% of cobalt use. Cobalt is also used in electroplating and stainless steel; in making magnets; in making alloys for high-speed and high-temperature cutting tools and dies; alloys for gas turbines and jet engines.

The following are some of the devices and vehicles which are expected to increase in sales in the coming years, and the amount of cobalt in their batteries for each item:

 

At present, Apple is the largest end-user of cobalt. In 2017, Apple sold 216.76 million iPhones. Conservatively, that is equivalent to more than a 1,030 metric tons of cobalt for the iPhones sold in 2017 alone. Tesla sold more than 103,000 cars in 2017, roughly equivalent to 2,300 tons of cobalt. In 2016, there were 156.8 million laptops, and 174.9 million tablets were sold, accounting for a total of close to 21,000 metric tons of cobalt.

Cobalt production in 2017 totaled 110 metric tons. The top 6 producers were:

Country 2016 Production (metric tons) 2017 Production (metric tons) Reserves (metric tons)
The Democratic Republic of the Congo 64,000 64,000 3,500,000
Russia 5,500 5,600 250,000
Australia 5,500 5,000 1,200,000

 

Canada 4,250 4,300 250,000
Cuba 4,200 4,200 500,000
Philippines 4,100 4000 280,000

To put the growing demand into perspective, especially for electric vehicles, current total investments in electric vehicles total $90 billion, of which the US accounts for $19 billion, China investments are estimated to be $21 billion, and $52 billion in Germany. This will ramp up considerably in the coming years, with Volkswagen already committing to $40 billion in investments by 2030 for the EV version of more than 300 models. Volkswagen is the parent company of Volkswagen cars, Audi, Porsche, Skoda, SEAT, Bentley, Bugatti, Lamborghini, Ducati, VW commercial, MAN trucks, and Scania.

The Race to Buy and Secure Supply

With the current cobalt supply just keeping up with demand, future growth for batteries would be hindered if the supply slips even a little. This would explain the recent rumor that Apple was in direct talks with mining companies for their supply of cobalt in the next five years. Although Apple did not comment on the rumors, Glencore PLC acknowledged that Apple was one of the companies that have approached them to supply them with cobalt directly. Glencore PLC is the largest cobalt producer in the world with 29% of production. The Swiss-based company is included in the Fortune Global 500, listed 14th in terms of revenue. The company is projected to have production growth of 133% over the next three years. Their 2018 forecast is the production of 39,000 metric tons of cobalt, an increase of 42% from last year.

With this move, Apple would be able to save several billion dollars if they can source cobalt directly from mining companies. This would also result in transparent sourcing of materials due to concerns about illegal mining in Africa as well as child labor issues. Last year, Apple released a list of cobalt mining companies where their batteries were sourced, with a message that it would not buy from small-scale miners in the DRC unless “appropriate protections” were put in place.

Apple is not the only manufacturer seeking to secure its supply of cobalt. Others include Volkswagen AG, BMW AG, Samsung SDI Co., and SK Innovation. Samsung is the number one Android manufacturer in the world, and their continued leadership in terms of sales is dependent on the supply of batteries. SK Innovation is South Korea’s top oil refining company, and they have secured an agreement with Australian Mines Ltc. For least $3.9 billion worth of cobalt and nickel. SK Innovation will, in effect, buy all of Australian Mines production in the new Sconi mine in Queensland, Australia. This will be used in their Hungarian EV battery manufacturing plant to fill up the expected output for the next 10 to 13 years.

Although BMW does not have any electric vehicles on the road at the moment, they are on the way to securing supplies for both cobalt and lithium. They’re looking towards a 10-year supply of both metals for batteries as part of their EV strategy.

Impending Cobalt Crisis?

The Macquarie Research estimated that there would be a deficit of 885 tons this year. This is expected to increase to 3,205 tons by 2019, and 5,340 tons by 2020. In the meantime, the price of cobalt on the market has increased by more than 330%. The increasing deficit is expected to impact the market price of cobalt further.

This may have already impacted some companies. Volkswagen has so far been unable to secure their estimated amount of cobalt. This failure has brought forth a concern about whether or not there is an impending cobalt crisis. Caspar Rawles is an analyst at Benchmark Mineral Intelligence and has stated that there is enough cobalt to meet the demands in the foreseeable future. The big problem is if we can get hold of the metal fast enough. This is where the problem arises as cobalt is still mined as a by-product of nickel and copper. 97% of the world’s cobalt supply is still the result of nickel and copper mining, and most of them come from Africa. Unfortunately, the prices of these metals are always on the downturn, and are currently at six-year lows, resulting in uneconomic production. There is a lot of reasons to open up new mines for cobalt. However, it is not a feasible solution considering the costs and development time.

The bold impact of cobalt, in the long run, is that it will still be mined for a long time to come, with new mines coming into line, and the vast reserves in the Congo. However, almost as bold is the idea of companies buying supply chains for their future uses. Companies like Tesla, Apple, BMW, Samsung, and VW need to make sure that they have a steady supply before they can promise the production of their products in the next five, ten or twenty years.

Automation in Food Industry: A Tech Trend in 2018

Everyone who has worked in the food service industry will tell you that lunchtime is always a hurdle. Tons of people scramble around between 12:30 to 2 PM which makes it a stressful time for the kitchen and service crew, and to some extent — for the customers.

This is one of the most important times of the day for any restaurant as the sales during breakfast and lunch make up a huge portion of a restaurant’s daily income. It is true for almost any food establishment – whether it’s a privately-owned restaurant or multinational fast food chain. The go-to solution of most restaurant owners is to add more staff for more manpower. Some establishments, however, are beginning to feel that this might not be the optimal solution.


Since they are looking for a faster solution, restaurant chains all over the world have begun automating parts — or some, all — of the stages of their food operation. This includes accepting an order; serving a customer; and preparing the food.

This isn’t an entirely new concept as the very first automated restaurant, Quisisana, was established back in 1895 in Berlin, Germany. After this, the idea spread to the US and another restaurant like it opened in 1902 with Hord & Hardart.

These restaurants are called automat restaurants where hungry customers can pick up home-cooked meals and pre-packed sandwiches through vending machines. Of course, our hunger to innovate is just as strong as it was 122 years ago. Now, we are still thinking about automating our dining experience but are now using technology that’s more known to us. With the rise of mobile apps and touchscreen technology, hungry customers want more customized options while waiting for shorter queues.

In fact, studies have shown that there are five advantages of automation in the food industry: It can cause a reduction in the labor needed to make the food; it standardizes the output of the food produced; reduces waste; increase in work safety; and quality and brand protection.

Mintel’s US report on dining out in 2018, states that almost one out of five diners will plan on using mobile food orders this coming year. One in seven diners would also like to see an increase in options from food kiosks. It is these data that the big companies are sure to take note of. In fact, you’ll notice that the local McDonalds in your area probably have a self-serving screen installed nowadays. This allows you to order a Big Mac meal on your own before proceeding to a manned counter to pay. Big companies are now trying to move their entire food operation with as minimal staff as possible for both the counter and the kitchen.

Boeing’s Horizon X Snatching Up Startups

Boeing, one of the largest aircraft manufacturers in the world, launched Horizon X in April 2017. The new venture investment division was created to invest in aviation related technologies. In a separate development, Boeing also recently bought Aurora Flight Sciences, an aviation company with a track record of developing more than 30 aircraft, both autonomous and drones, since its founding in 1989.

Fast Acquisition

Boeing acquired Aurora Flight Sciences, a Virginia-based company which is working on a vertical take-off and landing (VTOL) aircraft for the U.S. Air Force. Aurora has developed more than 30 aircraft, both autonomous and drones, since its founding in 1989. In addition, Aurora is also an Uber partner in the development of an air taxi.

The bold move was first announced in October and was finalized in November 2017. This gives Boeing the advantage of getting into the thick of the competition for VTOL aircraft. Airbus had earlier announced that they would start testing their electric flying cars this year. This is in line with the deployment of autonomously-piloted aerial taxis.

The acquisition is fast because Aurora is a privately-held company. In addition, Aurora and Boeing have worked on military and commercial autonomous aircraft projects before. The leadership of both companies have also been on good terms even before the planned acquisition. Besides working together on several projects, the two companies are also included in the USAF 8-year $499 million ASAPTR contract to research novel tech for future aircraft.

Aurora will operate as an independent subsidiary under the engineering, test and technology division, headed by Boeing Chief Technology Officer Greg Hyslop. It will continue to focus on technology development for autonomous flight, machine learning, electric propulsion and flight control systems. It was recently awarded an FAA Special Airworthiness Certificate for a Bell UH-1H autonomous helicopter developed under the U.S. Navy. Last April, it completed a subscale vehicle demonstrator flight test program of the XV-24A LightningStrike for the Defense Advanced Research Projects Agency. The full test program begins late 2018. The XV-24A is a VTOL-capable aircraft with tilt-wing capability and has no exposed rotors.

Fighting for Space in Autonomous Flight and Air Taxis

Autonomous flight is inherently different from fixed-and rotary-wing aircraft. However, according to Carry Haase, the program manager for Aurora, the company uses the same basic autonomous control system for all types of platforms. The difference is in the solution space. Helicopters and fixed-wing aircraft have different vehicle dynamics resulting in tighter or wider maneuvers. However, in solving problems for autonomous flight the platform senses the environment. Also, with the use of machine learning, it plans its own route and implement the flight commands accordingly.

Prior to Aurora, Boeing was the only major aircraft manufacturer without an autonomous aircraft project for possible consumer use. The acquisition of Aurora has changed the playing field in favor of the company. Granted that Airbus is set to start testing autonomous aircraft in 2018, Aurora already has the tools and knowhow to make their own autonomous taxis.

Vice President and general manager of Boeing for the autonomous systems business unit, Chris Raymond said that Aurora brings with it a large research and technology portfolio, good manufacturing practices and prototyping capabilities. He also noted that Aurora is under the engineering and technology group so it reports to Boeing’s executive council, maintaining its own commercial and defense programs.

The acquisition of Aurora is a big advantage for Boeing. It’s an engagement with a company that has long experience in VTOL aircraft development, autonomous flight capabilities, and electric aircraft development. It also puts Boeing in the running for the autonomous air taxi market which is still in its germinal stage.

Investments in Non-Traditional Partnerships

Horizon X started investing in April, with Zunum Aero, an alternative propulsion aircraft startup. It is currently developing “hybrid-to-electrics” short-haul aircraft with low aviation emissions.

In June, the investment company joined in the initial funding round of SparkCognition. The $32 million initial funding round was led by Verizon Ventures. The IT security and industrial operations startup has developed a platform for security, finance, telecommunications, energy, oil and gas, manufacturing, aerospace and defence. The platform is used as a tool for cognitive and data-driven analytics.

Horizon X continued its investment streak in October when it also invested in Near Earth Autonomy, a startup which specializes in autonomous flight. The startup started as a spin-off from Carnegie Mellon University’s Robotics Institute.

As part of Boeing’s recent aggressive stance it has also been involved in talks with Brazil’s Embraer. According to sources,the talks will only include commercial aviation. The military aviation part of Embraer are not part of the discussions.

Boeing has also shown its commitment to help build up a new division, Boeing Global Services, to grow to a $50 billion company. Along those lines, it has gone into a joint venture with Adient PLC, a supplier of automobile seats, to develop high-class, lie-flat seats for airliners.

The airplane manufacturer has also gone after airplane parts supplier Woodward, Inc. for a possible joint venture. Woodward currently also has a jet-engine parts partnership with General Electric. If this pushes through, it will most probably be a joint partnership but it will not include any development which would infringe on the research and development efforts with GE.

Boeing’s joint ventures and investments is seen as a consolidation of its position as one of the largest aerospace companies in the world.

 

CHIP: The Core Principles of Mobility

Authors of the recently launched book “Faster, Smarter, Greener: The Future of the Car and Urban Mobility (MIT Press)” discuss the history of the car, current trends and how we’ve arrived at today’s problems in mobility. Then they move on to outline the core principles of mobility for the future.

The authors of the book are Prof. Charles Fine, Venkat Sumantran and David Gonsalvez. Fine is a professor at MIT Sloan who researches on supply chain strategies. Sumantran is the Celeris Technology Chairman, while Gonsalvez is CEO and rector of MIT’s Malaysia Institute for Supply Chain Innovation.  In the book, the authors detail a possible solution for the replacement of cars as the dominant form of transport and mobility.

Their idea revolves around the concept of “CHIP” architecture. CHIP stands for connectivity, heterogeneity, intelligence, and personalization.

Increasing Connectivity


In any mobility solution, there would be different modes of transport. It is vital that citizens should be able to move from one mode to another in a seamless manner. Keeping people and transport connected helps keep transition costs low. With low transition costs, people can take advantage of the different modes of transportation. A person can take the train, then ride a bike, and then walk, without any need of an external agent. With automated credit card transactions, users do not need to pull out their credit cards every time they purchase anything.

Heterogeneity

Currently, there is an inordinate dependence on cars. People will have options to take the train, the bus, the subway, car-share, bike-shares or light rail. Along with the mix, they can also choose to ride a bike along well-maintained paths. Cities need to support these array of solutions with the necessary infrastructure.

Intelligence

Big data and intelligence can help to build the smart CHIP infrastructure. Apps can help people find the best way to get to a certain destination. Other information which can be part of the app is the weather and traffic conditions. With the use of an app, the information is readily available to the user.

Personalization

These solutions and apps are customizable across different platforms. The commuter can choose a path from one point to another with the use of a personalized option. He can choose the fastest route, the traditional route, cost, speed, safety and others. Each person is unique, and personalization addresses the needs of these individuals, at any given time.

The above concepts are the basis for any solution to phase out the car. The car is s a person’s second home. This familiarity makes it hard for the general public to choose other options. However, it requires an integrated solution to compel people to ride a bike or walk to the office. A recent study showed that cars are only used for about one hour a day. There is also a large number of people who drive their cars to work every day. Cutting down on this habit would result in a significant reduction of greenhouses gases. With an integrated approach the user does not need to bring his car to work, as there are other options for getting a person from point A to B.