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General Market Commentary
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General Energy
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General Market Commentary
Cobalt-focused juniors eye the perfect storm with demand set to double
There has never been a better time to develop cobalt-focused mining assets with demand for the battery component predicted to double over the next decade.
According to research house Roskill, the market is expected to expand by 14.5% every year for the next ten, hitting 210,000 tonnes by the end of 2027.
That’s the base case. A more bullish scenario sees total global demand moving to 310,000 tonnes over the next decade.
Elon Musk’s Tesla is often cited as one of the driving forces behind the insatiable demand for the element, which is used in the lithium-ion batteries that power his cars.
And indeed, widespread adoption of green vehicles of all makes and sizes will underpin the next expansion phase.
“Several automotive manufacturers are looking to position themselves to be able to meet particulate matter and carbon-dioxide emissions targets have very publicly began to seek out sources for the cobalt they will soon require,” the Roskill report points out.
“Such moves have bolstered the bullish sentiment in the cobalt market and have helped to elevate prices too.”
But remember, cobalt has uses other than propelling fleets of next-generation sports cars, hatch-backs and saloons.
It is a component of alloys used for aircraft engine parts, while the chemical industry is a big consumer too.
In other words, there’s a base demand for production outside the battery sector.
Keeping the market supplied should be reasonably straightforward over the next five years, Roskill says.
Known and identified opportunities
There are “known or identified” expansion opportunities from existing producers, especially in China, it points out.
Recycling and the use of tailing could also help feed the beast until 2023, on Roskill’s base case outlook for the sector.
“Thereafter, a combination of further expansions from existing miners, new projects, and perhaps the re-start of some operations on care and maintenance will be required if supply is to meet demand,” analyst Jack Bedder said in his report.
“With the vast majority of cobalt mined as a by-product of copper and nickel mining, future mine supply is complicated by the fact that cobalt output is principally governed by demand for, and subsequent supply of, copper and nickel.”
The last 18 months have seen the cobalt price “sky-rocket”. Between 2012 and 2016, it cost just US$13 per pound.