In September, Reuters reported exclusively that VW was moving to secure long-term supplies of cobalt for the group's ambitious electric vehicle plans.

Earlier this month Volkswagen approved a 34 billion euro (£30.37 billion) spending plan by the end of 2022 to accelerate its efforts to become a global leader in electric cars.

"We have requested different options for a hedge from the raw materials industry in the context of a tender ... We have already had constructive talks with the well-known suppliers and will continue those (discussions)," a VW spokesperson said.

"Besides supplies and costs, other topics in discussion include future capacity expansion, sustainability and transparency."

The talks last Wednesday and Thursday in Wolfsburg, Germany, where VW is headquartered, had aimed to thrash out cobalt supply deals with Glencore, China's Huayou Cobalt, commodity trader Traxys, U.S. miner Freeport-McMoran and Eurasian Resources Group (ERG).

ERG confirmed its representatives had attended the meeting. Glencore declined to comment. No one at Huayou, Traxys and Freeport was immediately available to comment.

"They are looking for prices below the market, they have a lot to learn about cobalt," one source said. "We didn't get into the details of how much tonnage they would need."

Cobalt metal prices at around $30 a lb are up from below $10 a lb in December 2015 and the highest since October 2008.

Prices surged last year as auto makers and governments around the world started to promote electric vehicles in earnest as a means of cutting noxious fumes from cars fuelled by diesel- and petrol-powered engines.

Sources were unclear about whether VW was planning to buy the cobalt directly or indirectly for chemical and battery makers.

"Other suppliers may be involved, but they weren't there last week," a second source said. "They want a fixed price, that's not possible. They wanted to agree all supply deals by the end of the year, it's not going to happen."

Producers and VW are expected to resume talks next year, sources said, though no firm plans had been made and that some of the discussions had focused on sustainability.

Cobalt consumers are under pressure to make sure the material they use is not tainted by child labour in the Democratic Republic of Congo, where roughly 65 percent of the world's cobalt estimated at around 100,000 tonnes this year comes from.

"Amnesty's reports have focused attention on child labour," a third source said.

According to S&P Global Market Intelligence, cobalt production is set to rise to 219,000 tonnes in 2022 from 122,000 tonnes last year, with most of the increase coming from the DRC.

At the company level, the market is dominated by Glencore, which produced more than 28,000 tonnes last year.

CRU consultant George Heppel earlier this year forecast global demand for cobalt metal at nearly 136,000 tonnes in 2021 and more than 161,000 tonnes in 2025 from roughly 102,000 tonnes this year.

Demand for batteries used in electric vehicles and mobile appliances is expected to account for 46 percent of that in 2021, up from about 40 percent this year, Heppel said.

(Additional reporting by Andreas Cremer, Tom Daly and Nicole Mordant; Editing by Veronica Brown and David Evans)

By Pratima Desai