Beautiful blue cobalt has long been used as a coloring pigment. Although still used in pigments, due to its high energy density, low thermal conductivity, ability to alloy, and ferromagnetism, cobalt now plays a variety of roles in modern technology, appearing in magnets, high-tech turbines and even in cancer treatments.
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Video Transcript:
I’m Samantha Deutscher for InvestmentPitch Media.
Today we’re looking at what’s behind the global demand for Cobalt.
Beautiful blue cobalt has long been used as a coloring pigment.
Although still used in pigments, due to its high energy density, low thermal conductivity, ability to alloy, and ferromagnetism, cobalt now plays a variety of roles in modern technology, appearing in magnets, high-tech turbines and even in cancer treatments.
However, it is the battery applications that are getting investors excited.
In 2015, 49% of cobalt was used in batteries.
Previously, the battery market was driven by consumer electronics such as smartphones, tablets and laptops.
It is now driven by other consumer products, grid storage, and transportation.
According to research from Wall Street’s Bernstein, by 2015, approximately one-third of lithium ion batteries were used in the electric vehicle sector.
It is interesting to note that all high energy lithium-ion batteries use more cobalt in their formulations than lithium.
According to a June 2017 research report, Canaccord Genuity forecast that by 2025, 73% of cobalt would be used in the global battery market.
The price of cobalt has already seen a dramatic increase over the last couple of years, from US$10 to the current price of $28.
This demand, was driven in a large part, by Tesla Motors’ announcement of plans to build up to 500,000 electric vehicles per year.
This is just the beginning as Bloomberg predicts that by 2022, battery demand by the electric vehicle industry will surpass consumer applications.
Going further out, Bloomberg estimates that electric vehicles will account for 35% of all new vehicle sales by 2040.
It is estimated that the size of the rechargeable battery market will reach $112 billion in 2025, with lithium ion batteries accounting for 70% of the market or $78 billion, according to estimates from Bernstein.
Cobalt is rarely found as a primary metal in nature, with approximately 97% of global mined production being recovered as a by-product of copper and nickel operations.
Unfortunately, the Democratic Republic of Congo is the world’s largest cobalt producer, producing 56% of the global output in 2016, and is expected to continue to produce between 50 to 60% of global output until 2025.
This is obviously not a reliable source, given the potential for supply disruptions from political instability.
The supply crunch has been exacerbated by a decrease in recent years in production from countries such as Australia, Russia and Zambia and little in the way of new projects to replace the lost output.
Canaccord Genuity is forecasting a continuing cobalt deficit, reaching 12,000 tonnes per annum by 2025.
They’ve also increased their forecast for cobalt to US$34.61 per pound, an increase of 25% over the current $28 price.
Given the potential for disruptions in supply, and the forecast for increases in demand, it is probably a good time to look closer at the North American cobalt companies.
I’m Samantha Deutscher for InvestmentPitch Media.
