Procurement of Cobalt in the Short to Mid Term - Opportunities and Impact Factors

Cobalt prices are expected to have a large impact over the next few years as the electric car battery market expands in line with demand for low emission vehicles. Lithium-ion batteries, which is the main components of electric vehicle motors and many rechargeable batteries contain about 60% cobalt. An increase in Cobalt prices are expected to hinder the path of electric car battery market, since raw materials constitute larger part of the production cost. The cost of production of other end use industries is also expected to get affected with the fluctuations in cobalt prices. This article discusses how the cobalt prices are expected to move in short term and long term, and how that can impact the end use industries of cobalt.   Introduction Cobalt is a metal of the future with increasing demand in various sectors including technology and energy storage industries. More than 40% of cobalt demand comes from the battery industry for products such as smartphones, laptops, and electric cars. Cobalt demand is expected to increase by around 8-9% from 2014 to 2016, primarily driven by the demand from the battery sector. The next largest end use of the metal (~19%) is for super alloys that are being used in jet engines and wind turbines. Republic of Congo (DRC) constitutes more than 50% of the cobalt mine production, mainly as a by-product of Copper mining. China is the second largest producer with a market share of 7%. DRC refines only a part of its production, and exports the large part of unrefined cobalt ores to China, Zambia, and Finland for refining. Freeport Cobalt's refinery in Finland, and ENRC's Chambishi refinery in northern Zambia, Sherritt's metals refinery in Canada and Umicore's refining operations in Belgium are the major supply sources for refined cobalt globally. In 2014, the total production of refined cobalt from the main sources was valued at 91,754 tonnes. It was 7% higher than 2013. The Chambishi mine in Zambia accounted for 5% of the production by producing 4317 tonnes in 2014.   Author: Anagha