Cobalt's Chemistry Experiment

All batteries are not created equal.

The 53 kilowatt-hour pack on a 2008 Tesla Inc. Roadster contains an estimated 38 kilograms of cobalt, a key element that some analysts fear may be running out. The same-sized battery on a 2017 Tesla would have about one-eighth of that, or 4.8 kilograms.

That's the best reason to be wary of predictions that cobalt is heading toward permanently higher prices north of $100,000 a metric ton. The complex chemistry on which rechargeable batteries depends offers myriad opportunities to economize on any material that gets too costly.

Cobalt is a crucial ingredient for manufacturing most lithium-ion cathodes -- the "positive" ends of the cell, equivalent to the nipple atop a conventional AAA battery. Demand for such cathodes is set to soar as the world's vehicle fleet shifts from petroleum to electrical drive-trains, and as utilities build farms of rechargeable batteries to stabilize renewables-intensive power grids.

As a result, cobalt prices have been soaring. Over the course of 2016, Metal Bulletin's quoted price jumped almost 50 percent from $10.30 a pound to $14.70/lb. Since then, it's more than doubled to $29.85/lb, or $65,808 a ton.

Part of this is due to cobalt's risky supply situation. Half of global production comes from the Democratic Republic of Congo, which despite its name has never held a fully credible election and where a civil war has driven almost a million people from their homes over the past year. Of that, an amount equivalent to perhaps 10 percent of global output comes from low-tech artisanal mines where child labor is common. Most of the non-Congolese half of global production has traditionally come as a by-product of nickel mining, which has struggled in recent years because of weak prices that have left many of the largest pits operating at a loss.

The other price driver comes from demand -- and that's where the chemistry comes in. The cocktails of elements used to make lithium-ion batteries aren't all that less diverse than the cars they power, and recipes can call for wildly differing proportions of ingredients.

One reason cobalt has been soaring, according to Bloomberg New Energy Finance's Logan Goldie-Scot and Julia Attwood, is new regulations from China. These have been pushing manufacturers away from the locally popular lithium-iron-phosphate (LFP) cathodes -- which use no cobalt -- and toward nickel-manganese-cobalt (NMC) ones, which typically use about 12.3kg for a 53kWh battery.

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