Cobalt powerhouse doubles down on nickel

The Brussels-listed company, which has been refining cobalt for more than 100 years, says the burgeoning electric-vehicle industry is switching to high-nickel batteries far faster than expected. Now Umicore is racing to do the same.

The shift reflects widespread ethical concerns about cobalt mining — which takes place mainly in the Democratic Republic of Congo — while volatile prices have also caused problems for automakers in recent years. As a consequence, the car industry is now replacing cobalt with battery cells that contain much higher amounts of nickel.

“Umicore is exposed to mid-nickel platforms which are being replaced, much faster than initially anticipated, by high-nickel platforms,” the company said on Wednesday, noting that its sales have not kept pace with the explosive growth in the electric vehicle industry. “Customers are scaling back demand projections for mid-nickel cathode material.”

In response, Umicore is looking to get new high-nickel products approved by battery makers and car manufacturers. In December, the company flagged slowing sales in its battery-materials unit, but expects to reap the benefits of its pivot by the second half of next year.

To be sure, there are also ethical-sourcing concerns about nickel, which can be one of the most-carbon intensive industrial metals to produce. Umicore has an ethical sourcing framework specifically designed for cobalt, targeting issues such as child labor and corruption.

Nickel prices are also surging, adding to inflationary pressures on automakers who’ve staked their futures on electric vehicles.

For Umicore, surging cobalt and nickel prices were a boon last year, with the spike in prices spurring a record result for the company. Adjusted earnings before interest and tax jumped 81% to 971 million euros ($1.1 billion), with a rally in precious metals markets also lending support.

Umicore shares rose as much as 7.2%, the most since April last year, before trading 4.5% higher as of 11:34 a.m. in Brussels.