Cobalt has become one of the most in-demand minerals today due to its vital role in rechargeable batteries used in electronics and especially the surging electric vehicle market.

The result is that average annual cobalt prices more than doubled in 2017, and more than tripled between 2016 and 2017

But the world's supply of cobalt is threatened on multiple fronts.

With 98% of cobalt production coming as a by-product of the cyclical nickel and copper mining sector, and with roughly 60% of cobalt sourced in the conflict-ridden Democratic Republic of Congo (DRC), the need is high for primary cobalt production that is secure and domestic.

Demand for electric vehicles drive cobalt price surge

Demand for cobalt is growing rapidly

The US Geological Survey (USGS) estimates global cobalt production in 2017 was 110,000 tons.

But the predicted rise in electric-vehicle production is forecast to require annual cobalt production to total 314,000 tons by 2030, which is over 285% more than production levels in 2017

Driving this rapid growth in demand are companies dependent on rechargeable batteries, from consumer electronics giants such as Apple and Samsung, to nearly all the large automakers aggressively expanding their electric vehicle (EV) lines, from Tesla to Toyota, Ford, General Motors, BMW, VW Group and China's leading EV company, BYD.

Cobalt demand by end use

In response, analysts are revising their forecasts upward for electric vehicle adoption:

  • Exxon, BP and Statoil are expecting at least 100 million electric vehicles to hit the road worldwide between 2030 and 2035
  • Bloomberg New Energy Finance's bullish outlook projects 530 million cumulative electric cars will be sold by 2040 (about 33% of the market for automobiles)
  • Morgan Stanley predicts electric cars will outpace gasoline-powered cars within two decades

At the same time, Tesla's CEO, Elon Musk, has committed to sourcing only North American cobalt for his electric cars, representing ~7,000 tonnes of cobalt each year for his massive Gigafactory battery plant.

Sales of electric vehicles to 2035

Cobalt is a key component for batteries in EVs and electronics

Of the 5 most common types of rechargeable batteries, 3 rely on cobalt for their compositions.

NMC and NCA batteries are the 2 leading technologies favored for EVs, due to their exceptional energy density.

Cobalt makes up 8 to 20% of the longer-life, more stable NMC battery, which is the most prevalent battery type used across plug-in hybrid electric vehicle (PHEV) and EV models.

The higher-energy density NCA battery used by Tesla for its Model S, is made up of 9 to 10% cobalt.

The LCO battery favored for electronics, meanwhile, is made up of 55 to 60% cobalt.

Leading rechargeable battery types dependent on cobalt

Most of the cobalt supply is threatened

With global demand for cobalt increasing rapidly, reliable production sources are crucial.

However, most cobalt is produced as a by-product of nickel and copper mining operations. With nickel and copper prices commonly suffering from price swings, the predictability of developing or maintaining such mining operations can be less than desirable, and can adversely affect cobalt prices.

Even more significant is that roughly 60% of the global cobalt supply originates in Africa's Democratic Republic of Congo (DRC), which has been crippled since the 1960s by political uprisings, wars, violence and corruption.

Cobalt production by country (in metric tons)

In recent years, the violent political scene has closed borders, affecting the export of vital cobalt supplies.

Meanwhile, some of the world's largest corporations that use cobalt are being pressured by human rights organizations to ban imports from the DRC due to the cobalt supplies commonly being linked to child labor and unethical mining practices.

Due to cobalt supply risk, companies are looking for long-term supply deals, including BMW seeking a 10-year deal for its electric car program, and Apple reportedly in talks to secure several thousand metric tons of cobalt a year direct from miners in a deal spanning 5 years or more. On the national front, the US Geological Survey (USGS) in late 2017 listed cobalt as a critical mineral resource for the US.

The following day, a Presidential Executive Order was issued on a federal strategy to ensure secure and reliable supplies of critical minerals "that are vital to the Nation’s security and economic prosperity".

The Executive Order stated, "It shall be the policy of the Federal Government to reduce the Nation’s vulnerability to disruptions in the supply of critical minerals," and committed the nation to:

  • "identifying new sources of critical minerals";
  • "increasing activity at all levels of the supply chain"; and
  • "streamlining leasing and permitting processes to expedite exploration, production, processing, reprocessing, recycling, and domestic refining of critical minerals".

The Opportunity

With growing market demand and the need for cobalt production that is secure and domestic, progressive companies are acquiring, exploring and developing US-based cobalt properties.

Among those opportunities, the USGS singles out Idaho – where Century Cobalt's project is located – as representing 1 of only 2 deposit locations in the US where primary cobalt production could occur (i.e., production not as a byproduct of another metal).

Learn more about the Idaho Cobalt Belt .

Reference sources:
U.S. Geological Survey, Mineral Commodity Summaries, January 2018
Bloomberg, March 26, 2018
Government of Northwest Territories website, accessed March 2018
Wood Mackenzie (Greentech Media), July 2017
USGS Critical mineral resources of the United States, Professional Paper 1802, December 19, 2017 Presidential Executive Order on a Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals, December 20, 2017, February 21, 2018

Cobalt production by country (in metric tons)