Cobalt Demand to Rise 4 Times Despite Potential EV Battery Changes

Battery Metals
Cobalt Investing

Benchmark Mineral Intelligence expects cobalt demand to increase four-fold, rising to 219,679 tonnes by 2023 and 276,401 tonnes by 2028.

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.

“What is key to understand is that less than 5 percent of total supply is affected by this. It is, however, a major social responsibility issue for electric vehicle and battery makers to manage,” Moores explained.

Currently there is no large-scale output coming from other countries, but new resources could be developed, in particular in the US, which at present has little control over the cobalt supply chain.

“Regions such as the Idaho-cobalt belt, which is globally known as being a cobalt rich jurisdiction, presents one of the few opportunities for US cobalt supply security,” Moores told the US Senate.

First Cobalt (TSXV:FCC), which owns the Iron Creek project, eCobalt Solutions (TSX:ECS), which holds the ICP project, and International Cobalt (CSE:CO), which owns Blackbird Creek property, are examples of companies developing assets in that region.

According to the expert, the metal remains “the highest risk lithium-ion battery raw material, both from a supply structure perspective and a geopolitical one.”

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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: First Cobalt, eCobalt Solutions and International Cobalt are clients of the Investing News Network. This article is not paid-for content.

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