Global shortage of cobalt supplies, increasing battery recovery concerns

Bloomberg new energy financial analysts said a shortage of cobalt could occur sooner than expected, a problem that could threaten the construction of an electric car market in the next five to seven years. The introduction of new mines and the development of more potential cobalt reserves by the Congolese Government and mining companies has been taking a long time, which means that the market may have a cobalt supply shock in the early 1920s.

According to data from the trading company DartonCommoditis, Congolese cobalt production accounts for more than two-thirds of mining production. Forecasts of a sharp rise in demand for cobalt have spurred mining companies to develop new mines.

BMW AG said carmakers planning to expand their electric vehicles rapidly were aware of the dangers of a shortage of supplies. According to the BNEF report, electric vehicles are expected to account for one-third of the global market share by 2040. Sales of electric vehicles in China, the largest potential market, will grow faster than previously forecast, potentially putting short-term pressure on the cobalt market.

Analysts also said: "If the capacity of companies to produce cobalt does not increase as planned, cobalt prices may continue to soar, and there may be a serious cobalt shortage in the world."

Cobalt prices in London have risen more than 270 percentage points since early 2016, hitting a record high in March. A BNEF study released in October showed that predictions of a shortage of cobalt could not ease until 2021, and said new industry consolidation would be needed after 2020 to avoid persistent supply shortages.

Peter Deneen, managing director of EV-MetalsResources Group, a consultancy, said in an e-mail that the market may have digested the prospect of tight supply. Faced with a shortage of cobalt, China's BYD Corp. plans to launch a battery containing nickel, manganese, and cobalt by the end of this year, with a ratio of 8:1:1, and BMW expects to adopt the battery by 2021. By 2030, these low-cobalt chemical batteries will account for 57 % of the electric car market, according to BNEF.

Theoretically, if the batteries of all consumer electronics can be recycled, the world will need only 100,000 metric tons of cobalt per year by 2030 to solve the supply problem. However, BNEF reports that the current global battery recovery rate is 25 % to 50 %. Carmakers, including BMW, and handset makers such as Samsung SDI are considering developing cobalt recycling from used phones.

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