27/06/2023, 15:53 Cobalt, a crucial battery material, is suddenly superabundant

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Finance & economics | Cornucobalt

Cobalt, a crucial battery material, is suddenly

superabundant
How an obstacle to the energy transition disappeared

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Feb 16th 2023

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J ust a year ago a global crunch in one metal looked likely to single-handedly
derail the energy transition. Not only was cobalt, a crucial battery material,
being dug up far too slowly to meet soaring demand, but the lion’s share of
known reserves sat in Congo, a country rife with instability, corruption and child
labour. Fast forward to today and the price of the blue metal, which had more
than doubled between summer 2021 and spring 2022, to $82,000 a tonne, has
collapsed to $35,000, not far from historic lows.
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The story is partly one of reduced demand. Most cobalt goes into the battery
packs which power smartphones, tablets and laptops. Appetite for these, already
strong in the 2010s, exploded during the covid-19 pandemic. It has since waned
as people spend less time staring at their screens: as demand for consumer
electronics fell, so did that for cobalt. Even a boom in electric vehicles has not
been sufficient to counteract this, since manufacturers have done their best to
reduce use of the formerly super-expensive metal.

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At the same time supply is rising, and fast. Susan Zou of Rystad Energy, a
consultancy, forecasts that Congolese production will jump by 38% this year, to
180,000 tonnes. Most striking is a surge in Indonesian exports, which are
projected to hit 18,000 tonnes this year, up from virtually none a few years ago.
The world could find itself swimming in cobalt.

In other markets low prices would force producers to shut mines. Not for cobalt.
The price has already fallen below many miners’ break-even point. Yet Glencore,
th ld’ bi t id F b th th t it k t t l
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the world’s biggest, said on February 15th that it may keep output nearly
unchanged this year, having cranked it up in 2022; China Moly, a rival, is about
to open a new facility that may yield 30,000 tonnes a year (equivalent to 16% of
the world’s output in 2022). Big firms can tolerate low prices because cobalt is a
by-product of the extraction of copper and nickel, both of which remain pricey.
Electric-vehicle makers the world over are courting Indonesia for nickel, kick-
starting projects that will also yield cobalt. China Moly’s monster mine in Congo
will produce three times as much copper as it will the blue metal.

Prices may still rise a bit this year, as speculators seek to snap up bargains.
Beyond 2025, however, another dampener looms. By this time, the first wave of
electric-vehicle batteries, which typically last up to eight years, will begin to be
recycled, reducing the need for new supply. No matter how fast the energy
transition speeds up, the blue gold is unlikely to act as a brake.7

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This article appeared in the Finance & economics section of the print edition under the headline "Bolt from the
blue"

Finance & economics

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February 18th 2023

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