Categories: Energy / General Market Commentary
Topics: General Energy / General Market Commentary

Cobalt Demand to Rise 4 Times Despite Potential EV Battery Changes

As the energy storage revolution continues to pick up pace, cobalt demand is set to rise four times by 2028, Benchmark Mineral Intelligence Managing Director Simon Moores told the US Senate on Tuesday (February 5).

“We are in the midst of a global battery arms race in which the US is presently a bystander,” Moores said.

Benchmark Mineral Intelligence is currently tracking 70 lithium-ion battery megafactories, with only five currently planned for the US. These megafactories will almost exclusively make battery cells using two chemistries: nickel-cobalt-manganese and nickel-cobalt-aluminum.

As a result, the scaling up of lithium, cobalt, nickel and manganese assets has become a major challenge for the industry.

“The growth trajectory expected for lithium-ion battery raw material demand is unprecedented,” said Moores, who previously testified to the US Senate in 2017.

“Those who control these critical raw materials and those who possess the manufacturing and processing know-how, will hold the balance of industrial power in the 21st century auto and energy storage industries,” he added.

Speaking specifically about cobalt, if full battery capacity is achieved, the London-based firm expects demand to increase four-fold, rising to 219,679 tonnes by 2023 and 276,401 tonnes by 2028.

Benchmark’s forecast takes into account the trend of reducing cobalt usage in batteries, which many automakers, including US-based Tesla (NASDAQ:TSLA), have been looking into to avoid supply-side risks.

Despite automakers’ efforts to decrease the content of cobalt, which is critical for safety in batteries, Moores said he believes the metal “will not be engineered out of a lithium-ion battery in the foreseeable future.”

Another change that doesn’t seem to be in the cards is reliance on supply from the Democratic Republic of Congo (DRC), where most cobalt is mined.

“In fact, we are seeing DRC supply-side dominance increasing from 64 percent of global supply in 2017 to 69 percent in 2018,” Moores said.

Mining in the DRC has often been linked to child labor and human right abuses.

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