Cobalt has a high melting point and is ferromagnetic, with the ability to retain its strength and magnetic properties up to a high temperature. These unique properties make it a key ingredient in the green revolution, primarily for next generation battery technologies within the electric vehicle (EV) industry. Batteries with cobalt based chemistries typically have the highest densities, are more stable and safer. Cobalt is used in cathodes for lithium-ion batteries, which currently dominates the portable electronics market. This market is growing rapidly by 8.87% of CAGR and is expected to reach approximately USD $780 B by 2023.6
The innovations made in battery power technology have led to cheaper and more efficient lithium-ion batteries. This has been supported in part by government incentives looking to lower carbon emissions. As a result, EV’s are becoming more cost effective which has helped bolster its demand. In 2018, more than 2 million EV cars were sold, accounting for 2% of global car sales. EV prices are expected to fall further due to the beginnings of large volume manufacturing. Since the start of 2019, battery plants are either in production, under construction or being planned. Up to 300 gigawatt hours of capacity in Europe alone is forecasted to occur by 2028 according to the Benchmark Minerals Megafactory Assessment, and these plants will need a supply of raw battery minerals to feed them.8 As costs decreases and EV cars become more and more affordable, demand for cobalt will only increase. It is forecasted that EVs will account for more than 30% of cars on the road by 2040.9
However, it is expected that current supply will not be adequate to support this growing demand. Cobalt is unique compared with other minerals in that it is not purely demand that generates opportunity for producing mines – supply is also fundamentally challenged by the “by-product” weighted nature of cobalt’s production profile. Approximately 94% of cobalt mined globally is recovered as a by-product of copper and nickel operations.10 Therefore, increasing production or investing in new supply lines is not significantly incentivised by changes in cobalt demand. In addition, the current supply of cobalt is highly dependent on a single, high sovereign risk country, the Democratic Republic of Congo (DRC), which supplied more than 60% of world production in 2018.11
15% of this production comes from artisanal miners whose small-scale operations are notorious for low safety measures, dangerous working conditions and child labour issues. As a consequence, consumers are demanding responsible sources of this raw material. Major companies like Apple, Samsung, Tesla and Fisker have already expressed their desire to obtain and ensure ethical sources of cobalt in their products. Australia’s high standard of health and safety makes it strategically positioned capture this demand and to become a dependable, reliable and ethical source of cobalt.
Cobalt’s economic fundamentals remain strong, the increase in demand from the rise in EV coupled with a challenged supply source supports the potential for a price resurgence in the coming years. Coda’s Elizabeth Creek Copper Project has long term potential to provide an attractive, stable and ethical supply of cobalt to battery producers.
References
[6] Market Future Research. 2019. https://www.marketwatch.com/press-release/portable-electronics-market-2018-global-size-share-growth-factors-key-players-analysis-emerging-technologies-opportunity-assessment-and-trends-by-forecast-2023-2019-01-07
[7] S&P Platts. 2019. https://www.spglobal.com/platts/en/market-insights/latest-news/electric-power/020519-global-ev-car-sales-surge-63-in-2018-to-top-2-million-vehicles#
[8] INN. 2019. https://investingnews.com/daily/resource-investing/battery-metals-investing/cobalt-investing/cobalt-market-update/
[9] Bloomberg. 2019. https://about.bnef.com/electric-vehicle-outlook/#toc-viewreport
[10] The Cobalt Development Institute. 2016. ‘Cobalt Supply & Demand 2015.’ Cobalt Facts http://www.thecdi.com/cdi/images/documents/facts/Cobalt%20Facts%20-%20Supply%20%20Demand%20-%2015.pdf
[11] USGS. 2019. https://prd-wret.s3-us-west-2.amazonaws.com/assets/palladium/production/s3fs-public/atoms/files/mcs-2019-cobal_0.pdf
