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Through the Gateway: Cobalt – A Critical Mineral Under Scrutiny

A lustrous, silvery blue, hard ferromagnetic, brittle element, Cobalt’s physical properties are similar to Iron and Nickel. It forms various compounds, stable in air and unaffected by water.  Main uses include many alloys, including superalloys used in aircraft engine parts and high-speed steels, as well as magnets, and catalysts, to name but a few.

It’s Cobalt’s use in battery technology, however, that increasingly affords the metal “critical mineral” status.

A co-product of Nickel, the relevance to batteries of which we recently discussed, Cobalt is not only indispensible to the technology that powers electric vehicles and, increasingly, every aspect of our lives, from gadgets to household items to industrial applications – its supply is also fraught with challenges.

Says ARPN expert and Benchmark Mineral’s Managing Director Simon Moores:

“I think cobalt is the most critical of the battery raw materials, (…) I don’t think it’s necessarily the most important. I think that’s actually lithium. But cobalt, really, because 66 per cent comes from the DRC (Democratic Republic of Congo), then you’ve basically got a very lopsided industry from the supply perspective.”

Indeed, while China is the leading consumer of Cobalt, and supplies 62 percent of global refined Cobalt, most of the world’s Cobalt is mined in the DRC.  Roughly 93 percent of the Cobalt refined in China originates in the DRC, which, at 3,400,000 metric tons, is also home to the world’s largest Cobalt reserves.   In the United States, a Nickel-Copper mine in Michigan recently ramped up production of Cobalt-bearing nickel concentrate, but our domestic manufacturers remain import dependent for 75% of the Cobalt they consume.

Meanwhile, scrutiny of mining operations in the DRC is growing. A recent Washington Post feature outlines the conditions, which in some cases include child labor, and poor environmental standards.  Not surprisingly, battery makers and makers of consumer electronics and electric vehicles using these batteries, find themselves increasingly pressured to track where their Cobalt comes from, but the supply chain often remains murky.   While currently not a conflict mineral under the “Dodd-Frank Act,” a 2010 U.S. law requiring American companies to “attempt to verify that any tin, tungsten, tantalum and gold they use is obtained from mines free of militia control in the Congo region,” calls to add Cobalt to the metals covered by Dodd-Frank are getting louder.  

Moores argues that this growing “corporate social responsibility” (CSR) problem may likely lead to battery makers turning to Cobalt sourced outside the Congo.  Should that happen, it would be the equivalent of a two-thirds reduction in supply, at a time when clean-tech cobalt demand alone is set to spike.

While junior miners developing Cobalt-bearing properties see a great opportunity here, policy makers should also take note.

James Nelson, CEO at junior miner Cruz Capital, explains why:

“Any problems, geopolitical or otherwise, within the Congo and/or China, will definitely affect the rate at which cobalt is produced.”   

The U.S. may not be home to massive Cobalt reserves like some other countries, but Cobalt co-product production may be feasible in a number of states, including Alaska, California, Idaho, Michigan, Minnesota, Missouri, Montana, Oregon and Pennsylvania.

Working towards a policy framework conducive to promoting domestic resource exploration would be a wise proposition for policy makers going forward, if we don’t want run the risk of our laptop screens going dark.