Electric car boom to turbocharge battery metal producers - Moody's

* Battery metals consumption to increase sixfold by
mid-2020s
* DRC has biggest potential to gain from battery boom
* Cobalt production would transform DRC's fiscal position
* Chile, Philippines, Peru, Indonesia, Australia will also
benefit

JOHANNESBURG, Sept 10 (Reuters) - Demand for metals used in
battery electric vehicles could rise sixfold if electric cars
reach 8% of road traffic by the mid-2020s, delivering huge
dividends for producing countries like Democratic Republic of
Congo, Moody's said on Tuesday.
The credit ratings agency said a worldwide shift to electric
vehicles would likely drive up demand for cobalt, of which DRC
is the world's number one producer, as well as lithium, nickel
and copper.
However, weak governance in the central African country
could dissuade investors and scupper its potential, it added in
a research note.
Other economies that would reap the benefits of the push
towards electric cars include Chile, and the Philippines,
followed by Peru, Indonesia, and Australia, it said.
The battery boom has the greatest potential to boost Congo's
sovereign credit rating because the production value of these
metals would be "extremely large" relative to its economy.
By 2030 cobalt production could be equivalent to nearly 16%
of DRC's total GDP last year, more than half of its goods
exports and 133% of its government revenue, and significantly
boost its fiscal and current account balances, Moody's wrote.
But "very weak governance, poor infrastructure and
persistent pockets of social instability" remain key obstacles
to foreign investment, slowing the country's ramp-up of
production, they said.
An increased focus on environmental and social issues and
the traceability of metals adds another risk for DRC, Moody's
added.
But even "very partial" exploitation of DRC's mineral wealth
will likely have a credit-positive impact, the analysts said.
DRC's economy is already in thrall to volatile battery metal
prices. It is expected to grow 4.3% this year versus 5.8% in
2018 due to lower copper and cobalt prices, the International
Monetary Fund forecast. The fall in cobalt prices prompted Glencore GLEN.L to halt
output for two years from end-2019 at its Mutanda mine in DRC,
the world's biggest cobalt mine. Among other battery metal producers, Chile will likely see a
more moderate impact, with production of battery metals likely
accounting for more than 5% of 2018 merchandise exports and
total government revenue by 2030, according to Moody's.
Peru will likely increase its share of the metals market
through new exploration projects, while the Philippines should
also see economic gains and increased revenue collection.
Canada, China, and Russia would be the least impacted by
higher demand for battery metals, Moody's analysts said, due to
the size and diversification of their economies.