Electric cars – for the first time – led the demand for cobalt in 2021, outpacing smartphones and personal computers.
The electric car industry consumed 59,000 tons of cobalt last year, or 34% of total demand, with car sales doubling, according to a report from the Cobalt Institute.
Cobalt is a primary raw material used in electric car batteries, but with the rise in cobalt and nickel prices last year, discussions about the use of cobalt-free batteries have increased.
demand for cobalt
Cobalt demand grew 22% last year to 175,000 tons; Demand increased by 32 thousand tons in 2021 alone, compared to 51 thousand tons in the 5 years from 2015-2020.
The growth was driven by lithium-ion battery applications, which account for 63% of annual demand, and 85% of the growth year-over-year.
Cobalt demand is expected to approach 320,000 tons in the next 5 years, up from 175,000 tons in 2021, with 70% of the growth expected to come from the electric vehicle sector.
“As electric vehicles continue to revolutionize green and sustainable mobility, cobalt-containing batteries are a technology of choice for many car manufacturers in Europe, North America and China,” said Cobalt Institute President Adam McCarthy.
Cobalt Market Forecast
While supply is expected to increase this year and in 2023, leading to a more balanced market; The Cobalt Institute says it will start to slow down from 2024; This leads to a large deficit.
The report predicted that “supply growth in the period from 2024 to 2026 will average 8% annually, compared to more than 12% for demand.”
“From 2024, the market is expected to return to a deficit state as supply growth fails to keep pace with demand… Prices will remain high to stimulate more investment and prevent a widespread deficit,” the institute said.
The price of cobalt doubled last year; It rose from $16/lb to $32/lb on the back of strong demand from the auto sector and supply disruptions. It is currently trading at $37/lb.
Electric car sales growth
Global electric vehicle sales doubled in 2021 versus 2020, with half of cobalt demand seen coming from the sector by 2026.
Although the market share of lithium-iron and cobalt-free phosphate cathodes is rising; Last year, cobalt-containing battery chemicals accounted for 74% of the global electric vehicle battery market.
“This is largely due to the superior energy density, safety and performance that cobalt guarantees,” the Cobalt Institute says.
“Looking forward, the demand for cobalt is expected to continue to rise rapidly as the transition to electric vehicles accelerates,” the report said.
“Supply will keep pace with demand in the short term, however supply chain bottlenecks remain a major risk,” he added.
The largest producer of cobalt
After declining in 2020, the supply of cobalt mines increased by 12% year-on-year to 160,000 tons.
The Democratic Republic of the Congo remained the largest producer; It represents 74% of global output and 87% of annual growth, according to the Investing News platform.
The report indicated that nearly three quarters of the world’s mined cobalt supply comes from the Democratic Republic of the Congo; Chinese companies and London-listed Glencore dominate production.
The report indicated that the central African country produced 118,000 tons of cobalt in 2021, much more than Australia – the second largest supplier – at only 5,600 tons.
Meanwhile, China led refining, followed by Indonesia, which the Cobalt Institute highlights as the largest growth market for refined cobalt production, and the country is expected to provide a quarter of total refined cobalt growth in the medium term.
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