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Once an obscure metal most people had rarely heard about, Cobalt, a co-product of Nickel and Copper, is becoming a hot commodity and is increasingly afforded “critical mineral” status.

The main reason for this development is Cobalt’s application in Lithium-ion battery technology. Soaring demand for rechargeable batteries and the growing popularity of electric cars have sent the price per ton of Cobalt soaring almost 70 percent this year already – however demand is only one side of the coin.

For tech giants like Apple and Tesla, which rely heavily on Lithium-ion technology to fuel their products, it is the supply side that is clouding the picture.  Writes Eshe Nelson for Quartz: 

“Bullish investors have pushed Tesla and Apple stock to record highs, but a steady supply of cobalt will be crucial to making their plans a reality. In part, fears about cobalt’s scarcity are behind the metal’s recent price surge. Cobalt is hard to get a hold of, and the market remains relatively small—93,000 metric tons were produced in 2016.”

On a global scale, 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 reserve.

Roughly 62 percent of global refined Cobalt is sourced in the Democratic Republic of Congo (DRC), where production conditions involving involve child labor and poor environmental standards in some instances, have not only invited sharp criticism, but have prompted tech companies to re-evaluate their sourcing strategies.   In March, Apple announced a temporary halt of cobalt purchases from artisanal mines in the DRC, while Elon Musk has made ambitious claims that Tesla will “produce 500,000 electric vehicles a year by 2018,” and that the Cobalt used “will be sourced exclusively in North America.”

Caspar Rawles, analyst for Benchmark Mineral Intelligence, puts it bluntly:

 “While there are a number of new cobalt projects being developed around the world, quite simply: there will be no electric vehicle industry without DRC cobalt.” 

Going forward, our friends at Benchmark predict a very tight market for Cobalt through 2020, at which point we will likely see a deficit.  Meanwhile, political unrest in the context of the DRC’s upcoming election may add uncertainty to the supply picture.

So while the United States will in all likelihood not be able to meet its Cobalt needs self-sufficiently, domestic projects coming online are welcome developments to alleviate pressures and concerns, and should be part of a comprehensive overall mineral resource strategy for the United States.

A 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.

Against the backdrop of market prices recovering and supply woes looming, mining companies are expected to increase spending on exploration for the first time in five years, reports news agency Reuters. In what may spell good news for the United States, analysts anticipate the biggest expenditure increases to occur in the United States, Canada and Australia, all [...]

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