A severe cobalt shortage is likely to occur in global markets

SEN China: Bloomberg New Energy Financial Analysts say a shortage of cobalt may occur sooner than expected, a problem that could threaten the construction of an electric car market in the next five to seven years. The Congolese government and mining companies have been introducing new mines and developing more potential cobalt reserves for 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, Congo's cobalt production accounts for more than two-thirds of the mining production. Forecasts of a sharp rise in demand for cobalt have spurred mining companies to develop new mines.

BMW AG said carmakers planning a rapid expansion of electric vehicles 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 grow 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-Metals Resources 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 supplies, China's BYD Co., Ltd. plans to launch a battery containing nickel manganese and cobalt by the end of this year. The battery ratio is 8:1:1, and BMW is expected to adopt this battery by 2021. According to BNEF, by 2030, these low cobalt chemical batteries will account for 57 % of the electric car market.

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 between 25 and 50. Carmakers, including BMW, and handset makers such as Samsung SDI are considering developing cobalt recycling from used phones.

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