EV sector overtakes alloys on cobalt consumption

The electric vehicle (EV) battery market became the largest end-use sector for cobalt metal in 2021 for the first time, usurping more traditional alloying and industrial applications, according to a report by the Cobalt Institute.

Demand from the EV sector accounted for 34pc of cobalt consumption last year. Other battery applications — such as mobile phones and power tools — totalled 31pc of cobalt demand last year, while industrial metals made up 14pc. Superalloys and industrial chemicals each accounted for 11pc of overall cobalt demand.

Global cobalt demand rose by 22pc to 175,000t in 2021 from 143,000t in 2020. Cobalt demand growth is expected to continue at a compound annual growth rate of 13pc going forward, forecast to reach 320,000t by 2026, with EVs driving 70pc of this growth.

"The cobalt market showed unprecedented annual growth last year, largely due to the continued global recovery from the pandemic and the rapid growth of the lithium-ion battery economy," trading and mining firm Glencore's head of cobalt trading, David Brocas, told delegates at the Cobalt Institute conference in Zurich on Tuesday. "We are pleased that cobalt-containing batteries were the technology of choice for many of the carmakers in China, western Europe and the US."

Rapid growth in demand for EVs was demonstrated by the proportion of cobalt demand growth coming from the lithium-ion battery sector. The sector represented 85pc of demand growth in 2021, compared with 6pc from the industrial metal sector, 5pc from superalloys and almost 4pc from industrial chemicals.

Global EV sales surged to 6.7mn in 2021 from 2.4mn in 2020, driven by extremely strong growth in China. Chinese sales were up by 166pc, while European sales grew by 65pc over the period.

New suppliers to tap into demand

Increasing demand and a constrained supply base have pushed cobalt prices higher globally, and newer producers are seeking to take advantage of the strong demand outlook.

Supply of mined cobalt material is still dominated by the Democratic Republic of the Congo (DRC), which accounted for 74pc of global output in 2021. But the country's production was affected by logistical bottlenecks as a result of Covid-19 restrictions impeding border crossings, civil unrest impacting transit routes in South Africa and container shortages.

In the coming years, the market will look to Indonesia to solve supply deficits, with several high-pressure acid leach nickel projects due to ramp up, producing cobalt as a by-product.

A number of projects in the country have significant planned refined cobalt output. Lygend OBI expects to produce 4,400 t/yr and an extra 2,250 t/yr in phase two, PY Huayue 3,000 t/yr and an extra 3,000 t/yr in phase two, Eramet/BASF at 5,000 t/yr, PT QMB New Energy Materials at 4,000 t/yr and PT Huafei Nickel Cobalt at 15,000 t/yr.

Australia is another country that is positioning to boost supply. Australian firm Cobalt Blue, a developing producer in the historic mining town of Broken Hill, expects to produce 17,000 t/yr of cobalt sulphate by 2025, while also looking to exploit mining waste in Australia.

"Australia has 16pc of global cobalt resources, but only 4pc of production, so we'd like to close that gap in time," Cobalt Blue chief executive Joe Kaderavek told delegates today. "As a result of over 100 years of mining, we have significant tonnage of cobalt, copper and other metals in surface waste sitting there waiting to be commercialised."

By Thomas Kavanagh