The 120 000 t/y to 130 000 t/y cobalt market is expected to double in size by 2025, with about half of global demand to be from batteries, says diversified commodities producer Glencore head cobalt trader David Brocas, who was quoted in investment banker Jefferies' latest cobalt-focused metals and mining report.
Brocas explains that consumer electronics (like tablets and mobile phones) are currently as big as the electric vehicle (EV) market for cobalt in batteries (each account for about 25% of demand), and demand in electronics is relatively price inelastic, in part owing to the low cost of cobalt relative to the total cost of the finished product.
It adds that other end-markets include superalloys (mostly in aerospace), magnets, chemical catalysts, hard metals and pigments.
However, the major demand growth, is “clearly in EVs” as Brocas believes that, while battery technologies that do not use cobalt will have a place in the market, such as in inexpensive cars with poor performance, batteries that contain cobalt will be critical for policy-driven decarbonisation or electrification initiatives.
In the Democratic Republic of Congo (DRC), specifically, Brocas says, cobalt buyers have been concerned about concentration risk owing to the high portion of supply that comes from the DRC – which holds about 60% of global cobalt reserves.
Additionally, child labour in the DRC has also been a concern, but Brocas notes that about 80% of cobalt mine supply in the DRC is from industrial mining companies that operate responsibly.
Of the other 20%, about half is from legal artisanal mining and half is from illegal artisanal mining, which could be using child labour.
The DRC’s government is trying to address this issue, but Brocas suggests that the best way to solve the problem, is through investment in the country to create jobs and raise living standards.
Glencore's efforts to address environmental, social and governance (ESG) issues in regions where it operates, such as the DRC, “are very much underappreciated”, Brocas laments.
Meanwhile, Brocas says Glencore expects to produce 35 000 t of cobalt from its mines in 2020, with most of its production expected to be from the KCC project in the DRC.
Glencore is restarting the Mutanda mine, which is expected to add about 20 000 t/y to the market but says it will ramp output up carefully “so as to not oversupply the market”.
Taking all of this into account, the company notes that it sees enough demand to absorb this additional supply.