The world will experience a gap in the cobalt supply – demand matrix, beginning this year.

Much of the world’s cobalt is produced only as a by-product of copper and nickel mining. This makes it very difficult to ramp up the production of cobalt, especially in an environment like the current one where the price for copper and for nickel has fallen. Experts predict falling cobalt production starting this year.

Making this problem worse is that over half of the world’s cobalt (as a by-product of copper and nickel mining) comes from the Democratic Republic of the Congo. There are serious ethical concerns associated with mining in this area, similar to blood diamonds in other parts of Africa. Amnesty International is pushing for the imposition of an ethical supply chain on cobalt coming from the DRC, which would further restrain supply by about 10%.

These supply cuts are coming at a time of increased demand.

Electric Vehicles, Aircraft Engines & Renewable Energy

Cobalt is a high strength magnetic metal with a diverse range of important uses in products from rechargeable batteries to aircraft engines, and it is expected to be at the leading edge of the search for alternative and renewable energy systems. This versatile metal has been recognized as strategically important by both the US and European Union has been trading on the London Metal Exchange (LME) since 2010.

Battery demand driving growth

Cobalt is critical for manufacturing high performance rechargeable batteries that are used in portable electronics, electric vehicles and stationary power storage applications. In the mid 1990’s, only 1% of cobalt demand was from its use in rechargeable batteries for electronics. However, the growing importance of lithium-ion and nickel metal hydride batteries in smartphones and other electronic devices contributed to the demand for cobalt in rechargeable batteries surpassing its use in superalloys sector for the first time in 2007. Rechargeable batteries have since been the largest end use of cobalt, accounting for 49% of cobalt demand in 2015.

Battery sector cobalt demand grew by 12% in 2015 and double digit growth is anticipated for the foreseeable future as major economies continue to diversify from carbon-based energy systems and vehicle electrification advances.

Cobalt sulphate is preferred by many battery manufacturers and usually receives a premium price to high grade cobalt metal.

Every Model 3 from Tesla Motors will require roughly 15 kg of cobalt for the lithium ion batteries. Tesla has pre-sold roughly 500,000 Model 3’s. That means just to satisfy the cobalt needs of the Model 3, the world will need to produce another 7,500,000 kilograms of finished-product cobalt, which is almost 8300 tons.

Metallic

Metallic uses include superalloys for the aerospace industry to make power and jet engine turbines, cutting tools and cemented carbides used to machine steel, and electromechanical devices such as magnets, electric motors, generators, transformers and magnetic storage tape and hard disks.

Chemical

Chemical uses include sulphates for manufacturing rechargeable batteries, catalysts for petroleum refining and to manufacture plastics, and as pigments.

Clean air

Clean air uses include oil desulfurization, fuel cells, hybrid vehicles, gas/coal to liquid technologies.

Renewable energy

Renewable energy uses include solar power, wind turbines, geothermal power plants, gas turbines, conversion of biomass to hydrogen and hydrogen storage.

Health

Health uses include it as a key component of Vitamin B12 which is essential for human health and necessary for neurological function, brain function and the formation of blood. Cobalt is also used in prosthetics, cancer treatments and food preservation.

ELECTRIC VEHICLES, AIRCRAFT ENGINES & RENEWABLE ENERGY

Cobalt is a high strength magnetic metal with a diverse range of important uses in products from rechargeable batteries to aircraft engines, and it is expected to be at the leading edge of the search for alternative and renewable energy systems. This versatile metal has been recognized as strategically important by both the US and European Union has been trading on the London Metal Exchange (LME) since 2010.

Accounting for ~65% of global mine production, the Democrat Republic of the Congo is the main source of cobalt with refining primarily based in China. Significant cobalt is also mined from nickel-cobalt laterite deposits, which have higher capital and processing costs relative to sulphide deposits.

BATTERY DEMAND DRIVING GROWTH

Cobalt is critical for manufacturing high performance rechargeable batteries that are used in portable electronics, electric vehicles and stationary power storage applications. In the mid 1990’s, only 1% of cobalt demand was from its use in rechargeable batteries for electronics. However, the growing importance of lithium-ion and nickel metal hydride batteries in smartphones and other electronic devices contributed to the demand for cobalt in rechargeable batteries surpassing its use in superalloys sector for the first time in 2007. Rechargeable batteries have since been the largest end use of cobalt, accounting for 49% of cobalt demand in 2015.

Battery sector cobalt demand grew by 12% in 2015 and double digit growth is anticipated for the foreseeable future as major economies continue to diversify from carbon-based energy systems and vehicle electrification advances.

Cobalt sulphate is preferred by many battery manufacturers and usually receives a premium price to high grade cobalt metal.

METALLIC

Metallic uses include superalloys for the aerospace industry to make power and jet engine turbines, cutting tools and cemented carbides used to machine steel, and electromechanical devices such as magnets, electric motors, generators, transformers and magnetic storage tape and hard disks.

CHEMICAL

Chemical uses include sulphates for manufacturing rechargeable batteries, catalysts for petroleum refining and to manufacture plastics, and as pigments.

CLEAN AIR

Clean air uses include oil desulfurization, fuel cells, hybrid vehicles, gas/coal to liquid technologies.

RENEWABLE ENERGY

Renewable energy uses include solar power, wind turbines, geothermal power plants, gas turbines, conversion of biomass to hydrogen and hydrogen storage.

HEALTH

Health uses include it as a key component of Vitamin B12 which is essential for human health and necessary for neurological function, brain function and the formation of blood. Cobalt is also used in prosthetics, cancer treatments and food preservation.