Cobalt24 Feb 2021 15:29
Watching with interest, Cobalt has a very bright future, more so than coal or iron ore IMO
Despite the COVID headwinds from the aviation sector and the trend towards thrifting cobalt out of automotive applications, A recent cobalt report forecasts a steady demand growth for the blue metal to 2030. Future market growth for cobalt will continue to be underpinned by the thriving battery industry and increasing requirements from other industrial applications.
Largely benefitting from its stability, hardness, anti-corrosion and high-temperature resistance characteristics, cobalt metal and its compounds are widely used in many industries important to the modern society, such as various battery applications, aerospace, and energy. Since the commercialisation of Li-ion batteries in early 1990s, it has been consumer electronics that has underpinned cobalt demand. The past decade saw a rapid growth of cobalt use from the automotive sector as a result of adoptions of cobalt containing cathode materials, although portable electronics remains by far the largest single end-application of cobalt.
Such solid growth in cobalt market was, however, disrupted by the COVID-19 pandemic which has impacted the global economy and other commodity markets in an unprecedented way. Aviation has been one of the sectors hardest hit by the pandemic. The battery industry has been less affected, owing to rising EV sales in Europe in H1 and expected recovery in 3C and EV sales in China in H2.
Meanwhile, the supply side has been so far more severely impacted by the pandemic. In Africa, a number of mining operations temporarily suspended production during the first half of the year, with some remaining closed as of October 2020, including Ambatovy in Madagascar and most of the artisanal and small-scale (ASM) operations in the DRC.
Production cutbacks coupled with Mutanda’s absence have triggered a tightening in cobalt feedstocks so far in 2020, and such tightness has been further intensified by logistic disruptions in Africa, caused by the pandemic, including weeks long closure of Durban port, a key transition point for shipping cobalt raw materials from the DRC. This has in turn pushed the prices for all forms of cobalt products higher, bringing the cobalt market to a more balanced state after a three-year oversupply.
Cobalt demand is forecast to roughly double by 2030, with battery applications accounting for majority of the overall demand. Despite the growing trend towards reduced use of cobalt per unit in the automotive sector driven by cost and ESG concerns, on a contained basis, cobalt demand would still be boosted by the growing penetration of EVs and exponential growth in EV sales in the coming decade. In addition, the successful commercialisation and roll-out of 5G technology can create new growth potential for the portable electronics industry from 2021 onwards, which can in turn boost smartphone sales and cobalt demand in the medium term.
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