Cobalt is an important raw material used in the production of lithium-ion (Li-ion) battery materials, superalloys, high-temperature alloys, cutting tools, magnetic materials, petrochemical catalysts, pharmaceuticals, steels and glaze materials. Cobalt demand is split between new and old economy drivers. New economy drivers include li-ion batteries and superalloys. Old economy drivers are typically industrial uses that include steels, tools, industrial chemicals and magnetic materials. The most significant driver of Cobalt demand remains Li-ion batteries. Consumer electronics, Electric Vehicles (EVs) and Energy Storage Systems (ESS) are the dominant uses for li-ion batteries.
- Li-ion batteries - EV
- Li-ion batteries - ESS
- Super alloys
- High-speed steel
- Hard-facing tools
Leading Cobalt Producers (2020):
- China Moly
- Huayou CNMC
- Shalina Zhejiang
- Jinchuan Group
- Norilsk Nickel
Key End Markets:
Cobalt use in chemical applications is dominated by the rechargeable batteries segment. Key sectors include Li-ion batteries for EVs, Li-ion batteries for other applications (laptops, PCs, smartphones etc.), polyester and tires. Approximately 50% of the world's Cobalt supply is used in the rechargeable battery industry, where Cobalt is an important component in li-ion batteries, with additional uses in nickel metal hydride batteries and nickel cadmium batteries. Cobalt use for the metallurgical industry is primarily centered on high-temperature alloys. Key sectors include superalloys (aerospace rotating parts, defense, power generation, thermal sprays, prosthetics etc.), high-speed steel, carbide, diamond tools and magnets.
Annual primary production in 2019 was approximately 140,000 metric tonnes. Annual demand for Cobalt is expected to surge to 210,000 metric tonnes by 2025, a 63% increase since 2017. The main reserves of Cobalt are concentrated in the DRC, Australia, Cuba, the Philippines, Canada and Russia. Currently, more than 70% of demand comes from China and is met by the DRC.
Source: Cobalt Primary Supply by Country/Region. ( US Geological Survey)
The DRC produces 71% of Cobalt today. The top five Cobalt producers control ~53% of global supply, typically sourced from DRC-based operations. China then processes 80% of global intermediates, producing Cobalt metal or Cobalt salts. Secondary supply of Cobalt (scrap/recycled Cobalt) remains small-scale, but is expected to increase post 2025 as increasing quantities of EV batteries become available for recycling. The second-largest Cobalt reserves are located in Australia. Australia’s Cobalt is expected to be in high demand going forward, as consumers increasingly seek secure and ethical supply sources. Australia’s Cobalt is primarily found in nickel laterite resources, and has also been extracted from copper deposits. With Australia holding an estimated one-sixth of the world’s known Cobalt reserves, there are significant opportunities for Cobalt extraction from existing mines, the development of known deposits and the discovery of new deposits.
Currently, Cobalt is traded as a commodity between companies. There is no liquid market available from a trading terminal, a situation similar to the lithium market. Consultants provide transparency by accumulating company-to-company transactions (provided they meet market specifications) and report these outcomes periodically, on a subscription basis. For example, at the time of writing, Fast Markets (formerly Metal Bulletin) was quoting Cobalt metal (99.8% grade) twice weekly. Pricing data for Cobalt metal (various grades) and Cobalt chemicals (typically hydroxides and sulphates) are not freely available. The London Metals Exchange first listed Cobalt metal in 2010 and has provided pricing data. The Cobalt price has been monitored approximately since June 2005. According to Mining.com, in the last 15 years the price peaked twice: April 2008 and April 2018 (see chart below), at US$52,25/lb and US$42,29/lb. More recently, Cobalt prices rallied from US$15.00/lb in January 2021 to US$20.25/lb on May 11, 2021. The LME three-month future cost US$44,000/tonne on May 14, 2021.
Forecast:IHS Markit expects global cumulative sales of battery electric vehicles (BEV) and other EVs to have reached nearly 2.5 million in 2020, and then rise by about 70% in 2021. For 2021, China and Europe should account for the largest market shares by far, with China at about 44% and Europe at nearly 28%. Lagging behind are North America with 16%, and a combined Japan/South Korea share of 11%. In 2025, global sales should top 12.2 million, indicating annual growth of nearly 52% (compounded), according to IHS Markit’s December 2020 forecast.
Many countries have set fleet CO2 targets as part of wider efforts to decarbonise and meet commitments under the 2015 Paris Climate Agreement. Europe has come forward with “the most comprehensive and severe legislation for transport CO2 emissions.” For instance, automakers must slash fleet CO2 emissions 15% by 2025 and 37.5% by 2030, compared to a nominal 95g/km base set for 2021. All types of hybrid setups are forecast to grow through 2030, though the types offered within individual markets will be linked to government incentives. According to Sopheon Report, mild hybrids (MHEVs) should see rapid growth in the near term, jumping from 3% of the global market in 2020 to 15% in 2025 and 20% by 2030.
The established trading history of Cobalt’s superalloy and metallurgical applications provide some indication for future demand behaviour. According toCRUX Investorfive-year demand growth of 5% and 2% respectively is expected for these segments. In particular, demand for superalloys is expected to be hit by the impact of Covid on air travel over 2020-23.
CRUX Investor’s 2021-30 Cobalt market forecast stresses that battery demand remains buoyant and should reflect secular EV and ESS growth, along with more GDP-like growth from the consumer electronics segment. There are several core drivers for battery demand: improving EV driving range and ownership economics, in turn stimulating consumer adoption; increased penetration of ESS devices, both household and utility scale; and improved stability and safety performance of li-ion batteries. EV batteries will dominate the 2021 battery market, accounting for an aggregate 54.7% of all battery materials and a 2016-21 CAGR of 23.7%. ESS demand should account for 24.4% of all battery materials and an even more impressive 2016-21 CAGR of 36.7%. Together this should drive strong demand for battery materials at a 2016-21 CAGR of 30.3%. According to CRUX Investor, cobalt demand growth should significantly outpace supply over 2021-30 and lack of cobalt on the global market could achieve around 156,000 tonnes by 2030.
- The Cobalt Market 2021-2030F
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- ERG AFRICA
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- IHS Markit