Electric vehicles overtake mobile phones as top source of cobalt demand
Auto industry consumes 59,000 tons of cobalt in 2021, accounting for 34% of total demand as EV and HEV sales double
The auto industry will consume 59,000 tons of cobalt in 2021, or 34% of total demand, as sales of electric and hybrid vehicles double, according to a report by the Cobalt Institute.
The auto industry will consume 59,000 tonnes of cobalt demand, as sales of electric and hybrid vehicles double, according to a report by the Cobalt Institute.
Strong demand
This exceeds the 26,000 tons of cobalt used in mobile phone manufacturing and the 16,000 tons used in laptops and tablets. Total cobalt demand was 175,000 tons, while the mined supply was 160,000 tons.
The mismatch in data highlights one of the biggest challenges facing the auto industry in its journey to electrification: ensuring that there are enough raw materials.
As more electric vehicles are rolled out, there are growing concerns that key battery metals such as cobalt, lithium and nickel could be in short supply. The automotive industry is expected to account for half of cobalt demand by 2026.
Serious supply problem
Cobalt is seen as a particularly serious supply problem because it is a by-product of copper and nickel mining, and supply is very concentrated in specific geographies and specific companies.
Nearly three-quarters of the world’s mined cobalt supply comes from the Democratic Republic of Congo, with production dominated by Chinese companies and Glencore. The Central African country will produce 118,000 tons of cobalt in 2021, well above the 5,600 tons of Australia, the second-largest cobalt supplier, according to a report by the Cobalt Institute.
That has sparked speculation about whether major automakers will buy mining companies. Elon Musk, Tesla’s chief executive, told an industry conference last week that he was open to the idea.
“It’s not impossible,” he said. “We will address any constraints that accelerate the world’s transition to sustainable energy, not that we want to acquire mining companies, but if that’s the only way to accelerate transformation, we’ll do it. .” Tesla’s goal is to produce 20 million electric cars a year, and last year Tesla produced 1 million electric cars.
LFP more popular
In China, the world’s largest electric vehicle market, more and more electric vehicles are powered by lower-cost lithium iron phosphate (LFP) batteries, which typically have poor range and performance. But top models in the U.S. and Europe are still dominated by nickel-cobalt compounds.
In 2021, these batteries will account for three-quarters of global EV demand, the report said. “Cobalt-containing batteries are the technology of choice for many automakers in Europe, North America and China,” said the director of the Cobalt Institute.
Looking ahead, the institute expects cobalt demand to increase to 320,000 tones over the next five years from 175,000 toes in 2021 as the auto industry produces more battery-powered vehicles. While supplies of cobalt are expected to increase this year and into 2023, leading to a more balanced market, the Cobalt Institute said supply will start to slow from 2024, leading to a huge deficit.
The report predicts: “Supply will grow by an average of 8% per year from 2024 to 2026, while demand will exceed 12%.” The price of cobalt doubled last year on strong demand from the auto industry and supply disruptions.
