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Cobalt – First Steps Towards Reducing Mineral Resource Dependencies?

recent piece for InvestorIntel zeroes in on a metal which, due to its growing use in battery technology, coupled with a challenging supply scenario is increasingly afforded “critical mineral” status – Cobalt.

A co-product of Nickel and Copper, the metal’s recent history, as author Lara Smith argues, has been “chaotic.” ARPN agrees that about sums it up. Criticism regarding the production conditions in the Democratic Republic of the Congo (DRC) — from which 62 percent of global refined Cobalt is sourced — mounted in 2016.  93 percent of the Cobalt refined in China – the world’s biggest Cobalt consumer – originates in the DRC, which, at 3,400,000 metric tons, is also home to the world’s largest Cobalt reserves.  Production conditions in the DRC, which in some cases include child labor and poor environmental standards, have lead battery makers to search for Cobalt sources outside the African country.

Smith highlights Elon Musk’s ambitious claim that Tesla will “produce 500,000 electric vehicles a year by 2018” and that the Cobalt used “will be sourced exclusively in North America.”

And indeed, it looks like there is a flurry of activity in this area:

A Nickel-Copper mine in Michigan recently ramped up production of Cobalt-bearing nickel concentrate (we highlighted ithere), but to date our domestic manufacturers remain import dependent for 75% of the Cobalt they consume.  Smith features a new Cobalt development project – involving “a high-grade and primary cobalt deposit” in Idaho in her post — which may decrease this number going forward. Cobalt co-product production may furthermore be feasible in a number of other states, including Alaska, California, Minnesota, Missouri, Montana, Oregon and Pennsylvania.

As ARPN expert panelist and Benchmark Minerals Managing Director Simon Moores, who has called Cobalt the “most critical of the battery raw materials,” points out, demand for the metal is growing:

“With a lithium ion battery production surge well under way – and Benchmark recently revising its megafactories tracker to now 14 that are under construction ranging from 3-35 GWh capacity – lithium ion battery demand for cobalt is set to exceed 100,000 tpa by 2020.”

In light of these numbers, the above-referenced projects are welcome developments that will help ease our over-reliance on foreign mineral resources -– but they should ultimately be part of a comprehensive mineral resource strategy our country has been sorely lacking.