Cobalt is vital for jet engine alloys and everyday electronics, like smartphones and laptops. But it’s the chemical element’s part as a key component in lithium-ion batteries (LIB), accounting for around 20 per cent of the raw material needed for cathodes, which has seen interest in the commodity reach feverish heights.
Presently the electric vehicle (EV) battery market only accounts for around 10 per cent of total cobalt usage, but sales of EVs are skyrocketing – up 58 per cent globally in 2017, according to Darton Commodities – driven primarily by China.
The huge sums of money being pumped into EV development by the automotive sector and announcements of several new LIB production factories planned has shaken the market.
Because eventual widespread EV adoption is now considered a certainty, with some reports forecasting the technology will reach price parity with conventional cars by 2025, since January 2016, cobalt’s market price has surged around 280 per cent, Darton Commodities says.
The race to secure supplies of cobalt has become urgent and China has taken the lead. Chinese chemicals firm GEM recently secured a deal with Glencore, the largest producer globally, for more than 50,000 tonnes of cobalt over three years, which represents around a third of the company’s total planned production during this time.
Apple has reportedly been in talks to buy long-term supplies of cobalt directly from miners for the first time ever and Volkswagen has had several failed attempts to lock in supply deals.
As the race for cobalt revs up, its production is getting evermore complex. Most major cobalt producing mines are located in the Democratic Republic of Congo (DRC) where roughly 52 per cent of the world’s reserves lie in the African copper belt that also includes northern Zambia. Last year, 67 per cent of global mined supply came from the DRC, which is seen as politically insecure.
The next two big production expansion projects are also in the DRC: Eurasian Resources Group’s Roan Tailings Reclamation (RTR) project and Glencore’s Katanga, both of which would increase the concentration of cobalt coming from the country to around 75 per cent of the global total.