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The Cobalt Market

An introduction to cobalt

Cobalt demand and end-uses

Cobalt is a silvery-white metal that was discovered in the mid to late 1730s. Cobalt is not a particularly rare metal and it ranks 32nd in global abundance, being present in the Earth’s crust at about 25-50 ppm.

Cobalt has several uses based on its functional properties: in batteries for vehicles (NiMH, Li-ion) and consumer electronics; in superalloys for aerospace, jet and gas turbine engines (energy generation) and other uses; and in catalysts, carbides, pigments, magnets, hardfacing alloys and other alloys. In most applications, the substitution of cobalt would result in a reduction in performance.

Demand for cobalt has grown substantially since the 1990s, and the battery and superalloys industries were responsible for much of this growth. Prior to this, the historically high cobalt price (resulting from conflict in former Zaire, the major producing region at that time) had constrained demand growth.

In 2001, demand was negatively impacted by a global economic downturn, with the electronics (battery) sector worst hit, and the terror attacks in September that year resulted in a slowdown in cobalt demand from the superalloys industry. Consumer stockpiling caused by lower prices at this time, combined with rapid demand growth in the Asian economies (China, Japan and South Korea), allowed demand to fully recover by the mid-2000s, with Li-ion batteries emerging as a key driver of cobalt demand growth.

The importance of China became much more pronounced during the 2000s, with Chinese demand accounting for <10% of total demand in the early part of the decade and increasing to around 25% by 2008. The region has taken market share away from Europe and the Americas (reductions of 10% each between 2001 and 2010). During this time, China became one of the world’s largest manufacturers of Li-ion batteries for items such as laptops and mobile phones. The battery sector is now, by far, the biggest end-use sector for cobalt in the country.

Growing sales of electric vehicles (EVs) facilitated a rush for cobalt. Unmatched supply and a strong positive outlook for EVs created ideal conditions for the cobalt price to surge, accelerated by stockpiling in China.

Cobalt supply and resources

Cobalt occurs in nature in a variety of minerals, including cobaltite, erythrite and linnaeite, and is associated with nickel, copper, iron, silver and lead ores. It is one of only three naturally occurring magnetic metals, along with iron and nickel. Cobalt may be substituted for transition metals in many mineral and chemical compounds and is commonly found in the place of iron and nickel as they share many similar chemical properties.

The vast majority of cobalt is produced as a by-product of copper and nickel mining. The Democratic Republic of the Congo (DRC) is the single-largest producer of mined cobalt, where it is mainly a by-product of copper mining and controls more than 70% of primary cobalt production, and continues to be at risk of being affected by political and economic stability. The remainder is produced as a by-product of nickel mining from nickel sulphide and laterite ores. There is only one primary cobalt mine, Bou-Azzer, which is located in Morocco and yields around 1.8 ktpa (~1% of global output in 2019). There is some artisanal cobalt ore production in the DRC along with output from old copper tailings where cobalt is the majority product.

Cobalt is typically associated with four types of deposit: nickel-bearing laterites (e.g. Cuba, New Caledonia, Western Australia), nickel-copper sulphide deposits (e.g. in the mafic and ultramafic rocks of Australia, Canada, Russia), strata-bound copper deposits (e.g. DRC, Zambia) and silver-cobalt sulpharsenide deposits (e.g. Canada, Morocco).

Continued press coverage on artisanal cobalt practices is leading to a drive towards ethically sourced cobalt. This falls under companies’ social responsibility, which is an increasingly important issue affecting the viability of projects. Cobalt supply chain mapping is being undertaken by refiners to trace the cobalt and identify the original mine site, with at least 3-4 tiers of traders between the artisanal miners and the refiners.

Non-conventional cobalt resources are found in polymetallic or “manganese” nodule concretions rich in manganese, cobalt, nickel, iron, copper and rare-earth elements, which are formed on sediment-starved deep ocean floors. They are present in the Earth’s crust at about 25-50 ppm. Unlike many land ores, nodules do not contain toxic levels of heavy elements, so can be processed with zero tailings and 100% of their mass can be turned into usable materials. The chemical composition of nodules varies according to the kind of manganese minerals and the size and characteristics of the core. Those of greatest economic interest contain manganese (27-30%), nickel (1.25-1.5%), copper (1-1.4%) and cobalt (0.2-0.25%). Any prediction about the effects of mining is extremely uncertain, but it is generally accepted that mining could cause habitat alteration, direct mortality of benthic creatures and suspension/dispersion of sediment plumes, affecting tens of thousands of kilometres of deep-sea ecosystems.

Cobalt has also been discovered in cobalt-rich ferromanganese crusts occur throughout the global ocean on seamounts, ridges and plateaus where currents have kept the rocks swept clean of sediments for millions of years. Crusts precipitate out of cold ambient seawater onto hard-rock substrates.

Cobalt supply-demand balance

 tonnes     2015 2016 2017 2018 2019 2020 2021f
Primary supply                  
 DRC     52,475 52,330 62,040 87,365 86,875 80,695 101,625
 Oceania     8,345 8,285 7,620 7,200 7,895 6,085 6,565
 Other Africa     3,510 3,960 4,205 4,010 3,220 3,085 3,315
 Russia     9,725 10,105 10,810 10,260 10,465 11,155 10,695
 North America     2,040 3,090 3,000 4,380 4,370 3,265 2,615
 Other     12,370 11,490 12,110 12,690 12,675 12,870 14,590
 Total     88,465 89,260 99,785 125,905 125,500 117,155 139,405
Demand and recycling
 Battery demand                
  Battery electric vehicles (BEV) 2,135 3,020 5,890 13,740 20,265 28,680 36,645
  Plug-in hybrid electric vehicles (PHEV) 215 325 1,035 1,340 1,305 2,300 2,630
  Full hybrid electric vehicles (FHEV) 100 115 275 265 400 500 600
  Mild hybrid electric vehicles (MHEV) 20 20 35 150 430 765 1,225
  Full cell electric vehicles (FCEV) 0 0 0 0 5 5 5
  Heavy-duty electric vehicles (HDEV) 0 0 0 15 155 315 575
  E-bikes     0 0 0 70 670 1,065 1,410
  Total     2,475 3,480 7,240 15,580 23,235 33,630 43,090
 Other battery demand                
  Mobile phones   20,230 20,540 20,490 19,545 18,900 17,365 18,505
  Laptops/notebooks   8,155 7,840 8,090 8,260 8,335 11,125 13,845
  Tablets   7,240 6,120 5,735 5,115 5,045 5,725 5,585
  Other batery     5,505 5,610 5,745 5,880 5,995 6,115 6,260
  Total other battery   41,130 40,115 40,060 38,805 38,270 40,325 44,190
 Non-battery demand                
  Superalloys   16,090 15,750 15,650 16,455 16,835 11,650 12,455
  Hard metals   9,090 9,330 9,635 9,945 10,200 10,455 10,750
  Other non-battery   23,075 24,030 24,875 25,495 25,520 25,100 25,940
  Total non-battery   48,260 49,110 50,150 51,890 52,555 47,205 49,150
Gross demand     91,865 92,705 97,450 106,275 114,044 121m160 136,430
Recycling     5,300 5,600 6,200 6,600 6,855 7,140 7,430
Net demand     86,565 87,105 91,250 99,675 107,190 114,020 129,005
Market balance   1,900 2,155 8,535 26,230 18,305 3,135 10,405

Source: SFA (Oxford). Updated July 2021. Note: Other non-battery demand includes hardfacing alloys, petrochemical catalysts, pigments, magnets, adhesives & driers, and other non-battery segments.

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