Electric Vehicles Overtake Phones as Top Cobalt Demand Driver

Cobalt demand grew an unprecedented 22 percent last year, with electric vehicles (EVs) overtaking other battery applications for the first time to become the top end-use segment.

Demand rose by 32,000 tonnes in 2021 alone, with EVs accounting for 59,000 tonnes, or 34 percent of demand, according to a report released by the Cobalt Institute.

“As EVs continue to revolutionize green and sustainable mobility, cobalt-containing batteries are a technology of choice for many car manufacturers in Europe, North America and China,” President Adam McCarthy said.

Global EV sales doubled in 2021 versus 2020, with of half cobalt demand seen coming from the sector by 2026.

Cobalt is an essential raw material used in the cathodes of electric car batteries, but with prices climbing last year for cobalt as well as nickel, discussions over the use of zero-cobalt batteries have been growing.

However, even though the market share of cobalt-free lithium-iron-phosphate cathodes is rising, last year cobalt-containing battery chemistries accounted for 74 percent of the global EV battery market. “This is largely due to their superior energy density, safety and performance ensured by cobalt,” the Cobalt Institute states.

Cathode chemistry of top EV models.

Chart via the Cobalt Institute.

“Looking ahead, cobalt demand is expected to continue rising rapidly as the EV transition gains pace,” the report reads. “Supply will keep pace with demand in the short term, however supply chain bottlenecks remain a key risk.”

Cobalt demand is forecast to approach 320,00 tonnes in the next five years, rising from 175,000 tonnes in 2021, with 70 percent of growth expected to come from the EV sector.

“From 2024, the market is forecast to shift back into a deficit as supply growth fails to keep pace with demand,” the Cobalt Institute explains in the recently shared document. “Prices will remain elevated to incentivize further investment and prevent wide deficits developing.”

After falling in 2020, cobalt mine supply rose 12 percent year-on-year to 160,000 tonnes. The Democratic Republic of Congo remained the top producer, accounting for 74 percent of global output and 87 percent of annual growth.

Meanwhile, refining was led by China, followed by Indonesia, which the Cobalt Institute highlights as the largest growth market for refined cobalt production. The country is expected to provide a quarter of total refined cobalt growth in the medium term.

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

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