Cobalt

2023: Glencore loses crown to top cobalt miner to Chinese company CMOC

CMOC Group became a major player in the cobalt market for the first time, acquiring the Tenke Fungurume mine in the Democratic Republic of Congo in 2016. In 2023, the company intends to double production, as it will commission another major mine in the second quarter.

2022

A change in the top three cobalt producers

At the end of 2022, Indonesia became the second largest supplier of cobalt in the world, second only to the Democratic Republic of the Congo. Such data are contained in the Benchmark Mineral Intelligence report, commissioned by the Cobalt Institute from Britain and published on May 10, 2023.

The document says that cobalt production in Indonesia has grown from 2,700 tons in 2021 to 9,500 tons in 2022. This represents approximately 5% of the global total. As a result, Indonesia was able to outstrip a number of major suppliers of the named metal, including Australia and the Philippines. Moreover, Indonesia has the potential to increase cobalt production 10 times by 2030.

DRC and Indonesia are world leaders in cobalt mining

The Democratic Republic of Congo kept its share at 73%. Australia produced 7,000 tons of cobalt in 2022 against 5,900 tons in 2021, when it was the second largest supplier. Production in the Philippines at the end of 2022 is estimated at 5400 tons. The shares of these states amounted to about 3% each.

The total world cobalt production in 2022 reached 198 thousand tons: this is 21% higher than the previous year. At the same time, the demand for metal on a global scale rose on an annualized basis by 13% - to 187 thousand tons. Of this amount, approximately 74 thousand tons, or almost 40%, fell on the segment of electric vehicles. For comparison: in 2021, the values ​ ​ were 56 thousand tons and 34%, respectively.

Due to its exceptional properties, cobalt is expected to remain a key raw material for the manufacture of batteries, despite the search for alternative compounds. In 2022, cobalt-containing chemicals accounted for 63% of the supply of materials for the manufacture of cathodes. Cobalt will remain an important part of the electric vehicle market and is expected to prevail in Europe and North America, the study notes.[1]

Africa is the biggest source of cobalt mining

As of March 2023

2021: Electric cars overtake smartphones as top source of cobalt demand

On May 19, 2022, a study was published that in 2021, electric cars overtook smartphones and personal computers for the first time as the main source of demand for cobalt, a rare metal used in lithium-ion batteries.

The automotive industry consumed 59 thousand tons of cobalt in 2021, or 34% of total demand, as sales of electric and hybrid cars doubled, according to a report by the Cobalt Institute.

Electric cars overtake smartphones as top source of cobalt demand

This exceeded 26 thousand tons of metal used in the production of mobile devices, and 16 thousand tons in the production of laptops and tablets. The total demand for cobalt amounted to 175 thousand tons, and production - 160 thousand tons.

The discrepancy between those numbers underscores one of the biggest challenges facing the auto industry as it transitions to electric vehicles: providing enough raw materials.

As more electric vehicles are released, there is growing concern about a potential shortage of crucial metals for batteries - from cobalt to lithium to nickel. By 2026, half of the demand for cobalt is expected to come from the automotive industry.

Cobalt is considered particularly problematic because it is a byproduct of copper and nickel mining, and its supply is highly dependent on geography and mining facilities.

Nearly three-quarters of the world's cobalt production comes from the Democratic Republic of Congo, which is dominated by Chinese companies and London-based Glencore.

A report by the Cobalt Institute shows that the central African country produced 118,000 tonnes of cobalt in 2021 - significantly more than the next largest supplier, Australia, which produced just 5,600 tonnes.

The growing number of electric vehicles in China - the world's largest electric vehicle market - are powered by cheap lithium iron phosphate batteries, which typically have less range and performance. But in the US and Europe, the best models are still dominated by nickel-cobalt batteries. These batteries account for three-quarters of global demand for electric vehicles in 2021, according to the report.

Cobalt-containing batteries are the technology of choice for many car manufacturers in Europe, North America and China, said Adam McCarthy, president of the Cobalt Institute.

According to the institute's forecasts, in the next five years the demand for cobalt will reach 320 thousand tons compared to 175 thousand tons in 2021, since the automotive industry will produce more cars with batteries.

While supply is expected to rise in 2022 and next year and lead to a more balanced market, the Cobalt Institute says it will start to slow from 2024, leading to large deficits.

In 2024-26, supply growth will average 8% per year, compared with more than 12% of demand, the report predicts.[2]

2018

Apple moves to direct purchases of cobalt

On February 21, 2018, it became known about Apple's intentions to directly purchase cobalt, which is a key component of batteries in electronics. The American corporation fears a shortage of metal due to the growing production of electric vehicles.

According to Bloomberg news agency, citing its own sources, Apple has agreed with mining companies on direct purchases of cobalt, which should provide the manufacturer iPhone iPad with sufficient metal reserves.

Demand for cobalt in lithium-ion batteries used in electric vehicles, smartphones, etc.

According to one of the interlocutors of the publication, Apple intends to purchase several thousand tons of cobalt, concluding contracts for a period of five years or more. Negotiations with mining companies lasted more than a year.

Apple is one of the world's largest consumers of cobalt, but until February 2018 it left the process of purchasing metal to companies that produce batteries for it. Company fears mass production of electric vehicles will cause cobalt shortage

Smartphones use about 25% of cobalt mined globally. For one battery, you smartphone need about 8 grams of cobalt, for battery sets of electric vehicles - a thousand times more. By the end of 2017, Apple had sold a total of more than 1.3 billion phones.

More than half (60%) of the world's cobalt reserves are in the Democratic Republic of Congo, long in political crisis and criticized for its use of child labor. In 2017, Apple published a list of cobalt supplier companies for the first time and said it would not allow the metal, which is mined in small mines where it works in violation of laws, to appear in its supply chain.

 In 2017, cobalt prices increased by 235% and by February 21, 2018 exceeded $80 thousand per ton.^[3]

Rising prices and rising prices for electronics

In January 2018, it became known that due to a sharp rise in the price of cobalt, prices for mobile devices and computer equipment could rise.

According to Bloomberg, in 2017, the cost of cobalt in 2017 increased from $33.2 thousand to $75 thousand per ton, which was largely due to an increase in demand for metal from electric car manufacturers, including Tesla Motors and BMW.

In the production of one smartphone, 5-10 grams of cobalt are used, in the production of a laptop - about 30 grams, and for an electric car battery you need 5-20 kg of material.

Cobalt Mining Leaders

Experts have calculated that if all cars with gasoline engines that are in the world by the beginning of 2018 are replaced by electric cars, then 14 million tons of cobalt will be required. This is more than twice the reserves available on the planet. The situation is complicated by the unstable economic and political situation in the Congo (60% of cobalt reserves are concentrated there).

In addition, the extraction of this metal goes in the most difficult and dangerous conditions for health , in addition , there are many children among the miners. Artisanal ore is bought by traders  from China, who then resell it to larger companies. One such company - China's Huayou Cobalt - supplies cobalt to battery manufacturers from China  and South Korea working with giants such as Apple, Huawei, Samsung  and Volkswagen. 

Due to rising prices for cobalt, all electronics, including smartphones and laptops, may rise in price. One option for solving the problem, experts consider the rejection of the use of cobalt in favor of other metals, for example, nickel. The latter has higher reserves in the world, which are also not concentrated in one country. On the world market, nickel is still six times cheaper than cobalt - it is sold  at $12,900 per ton (data as of January 15, 2018).^[4]

Notes