About Cobalt

"Cobalt is a critical raw material fundamental to industry and essential for enabling technological development and a low carbon future" ~ Cobalt Institute

Cobalt is known as an important technology enabling metal. Its uses span multiple industries, from health care and air travel to renewable energy and digital storage. Cobalt has many unique characteristics including its magnetic properties, resistance to high temperatures, wear and corrosion.

These properties make cobalt an essential metal used in metallurgical and chemical applications, which include, but are not limited to:

• As a catalyst for more efficient chemical processing and cleaner fuels.
• In rechargeable batteries to help increase current density and rechargeability.
• To propagate vaccines and enable diagnostics within healthcare.
• As an alloy to improve magnetic qualities (particularly at elevated temperature) for space vehicles, wind turbines and prosthetics.
• As a cobalt oxide used to enhance pigment colour and increase drying of paints.
• To help rubber adhere to steel bracing in tires.
• Enhance digital storage and increase digital processing.
• Provide hardmetals for cutting, drilling and grinding.

The driving forces for cobalt today are the rechargeable battery and renewable energy sectors as cobalt is an essential element in batteries. Cobalt used in chemical applications for rechargeable batteries accounted for 66% of total global demand for cobalt in 2018 (Source: CRU).

Cobalt is essential to the performance of rechargeable batteries used in personal devices, power tools, grid energy storage and electric vehicles for the following reasons:

• Safety – cobalt is essential for thermal stability of lithium-ion batteries and integrity of the cathode.
• Stability – provides thermal stability and resistance to the structure and functioning of the rechargeable battery during charging and discharging.
• Density – contributes to high energy density in Li-ion and Ni-MH/Ni-Cd batteries.
• Sustainability – rechargeable batteries allow for more extensive use of renewable energy contributing to a cleaner, greener planet.

Why Cobalt is an Essential Element

Since the 1990s, the largest demand for cobalt has been from the rechargeable batteries industry. Cobalt was initially used in NiCd and NiMH cells, but since the invention of the lithium-ion battery in 1995 this technology accounted for all of the growth in cobalt consumption from the batteries sector (Source: CRU).

There are many lithium-ion battery technologies that have been developed for different end uses but the three main drivers for change include safety, the need to reduce manufacturing cost and the need for increased storage capacity. Cobalt is used in the cathode component of the lithium-ion battery. Cobalt affects the battery’s charge time and energy density resulting in different battery chemistries being suitable for different end uses. Lithium manganese oxide has been used in cathodes to improve safety by decreasing the battery’s potential to overheat, which reduces the intensity of cobalt used in batteries.

(Source: Avicenne, CRU)

The Evolution of Battery Technology

Global demand for cobalt has increased steadily since 2010 reaching 118,000 tonnes in 2018, with all major end uses driving demand growth. Consumption growth has however been mostly underpinned by demand from the battery sector. CRU forecasts that demand for all forms of cobalt will increase to 191,000 tonnes in 2025 and 488,000 tonnes by 2035. This demand growth will be driven by the rapid increase in EVs that will take place over this period.

Every major car manufacturer in the world has announced plans to electrify their fleets:

Source: TD Securities, 2018

The EV market continues to rise in popularity and importance. It is forecasted that strong demand from the EV market can potentially double current cobalt demand by 2022. Stationary storage cells used to store energy from sources such as wind and solar powered generators and off peak grid charging are also contributing to cobalt's significant demand growth.

Increased demand is expected to also come from metallurgical applications, which currently represent approximately one third of cobalt demand, with superalloys representing nearly half that figure or approximately 16%. CRU expects overall metallurgical demand to grow by a CAGR of 3.8% between 2018-2023, supported by a 4.7% CAGR in aerospace demand on the back of production plans from Boeing and Airbus along with global military expenditures.

Cobalt ranks 32^nd globally in abundance. Cobalt is, with one or two exceptions, a by-product metal where it is produced with copper, nickel or platinum group metals (PGMs). Cobalt is found in copper ore-bodies in the African Copper Belt and in nickel sulphide and laterite ores; it is also found in the platinum reef deposits of South Africa. This means that existing and new cobalt supply channels are dependent upon the development of copper and nickel mines and to a very much lesser extent on the production of PGMs.

The top 10 cobalt producing regions in 2017 were:

Given its designation as a technology enabling metal, cobalt is seen as critical and strategic not only due to its uses in key industrial, sustainable and technological applications, but also because the majority of the world's cobalt is found in geographic areas that suffer from, at times, unstable conditions.

Top producing cobalt mines in 2017

According to Roskill Consulting Group Ltd., there will be sufficient quantities of refined cobalt from existing operations until 2021. Thereafter, large-scale expansions at existing operations and/or new projects will be required in order for supply to meet demand.

Source: Roskill, 2018

Global mined production as a whole is expected to increase 7% y/y in 2019 to 160,000t and 12% y/y in 2020 to 178,000t, before growth rates start tapering off in 2021.

Cobalt is a physically traded commodity where published market prices are derived from telephone surveys with traders and consumers. Prices of cobalt are provided in two grades: 99.3% and 99.8% purity.

Metal Bulletin publications have traditionally been the source for market prices of cobalt. However, in 2010 the London Metal Exchange (LME) introduced the cobalt contract where prices of exchange traded contracts are published. From 2010 through 2017, LME contracts were based on 99.3% cobalt. Beginning in 2018, LME contracts have been based on 99.8% purity cobalt. In March 2019, the LME launched a new cash-settled cobalt contract, settled against Fastmarkets’ benchmark standard-grade cobalt price.

Since mid 2018 the cobalt price has decreased by more than 50% due to an oversupply of product on the market resulting from excess cobalt production coming out of the Democratic Republic of the Congo and refined supply from China. While the long-term fundamentals for cobalt remain very strong, forecast prices for the near term have been reduced as a result of this oversupply.

LME Cobalt Price

Infomine Cobalt Charts

Cobalt and its compounds play a fundamental role in improving the efficient use of resources, and the recyclability of end-products. Through their special characteristics, they also act as a “technology enabler” providing opportunities for innovation and new applications for cobalt.

eCobalt supports and aligns with organizations such as the Cobalt Institute and the Responsible Cobalt Initiative in order to ensure that cobalt is ethically sourced and that its mining contributes to the economic, environmental and personal wellbeing of all stakeholders where cobalt is mined.

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• TD Securities Inc. (2019, March 13). Industry Insights. Cobalt Prices Weighed-Down by Large Inventories and Supply.