EVs Have Become Primary Driver of Cobalt Demand

Electric vehicles (EVs) surpassed smartphones and other electronic devices for the first time last year as the main driver of cobalt demand. The EV industry consumed 59,000 tonnes of the battery metal last year, accounting for 34% of the global total.

Smartphone manufacturers consumed 26,000 tonnes of cobalt and laptops and tablets used 16,000 tonnes of the battery metal. Total consumption of the metal reached 175,000 tonnes.

160,000 tonnes of cobalt was mined last year, highlighting one of the biggest issues the car industry faces as it goes electric, supply of battery metals.

Prices for cobalt, nickel, lithium and copper have skyrocketed since the start of 2021.

Battery producers have tried to use more lithium-iron-posphate chemistry, which doesn’t use either cobalt or nickel, but that tightens up the lithium market with spot prices doubling since the start of the year.

Global lithium industry is estimated to need as much as $42 billion of investment by the of the decade to meet demand.

The value of battery metals in newly registered passenger EVs around the world totaled $1.5 billion in December, increasing 192% year on year.

The world’s targets to achieve energy transition makes securing access to raw materials crucial. Cobalt’s role in batteries and recycling makes it one of the most important materials for a climate neutral future. The battery metal is appealing to the EV industry as it provides batteries with energy density to increase the vehicles’ range and the batteries’ life.

Supply comes mainly from the Democratic Republic of Congo, where a majority of the production is made by Glencore and Chinese companies.

Cobalt demand is estimated to grow to about 320,000 tonnes annually over the next five years, doubling 2021’s total consumption. The EV industry is expected to drive 70% of this growth.

It is also projected that supply will pick up this year and next, leading to a more balanced market. However, from 2024, cobalt availability will go down again, growing 8% a year, compared to more than 12% of demand growth, which will lead to significant deficits.

To secure raw materials, some manufacturers including Tesla and Volkswagen have announced intentions of becoming more involved in mining those materials.

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