Cobalt industry to get a big boost from the shift to a green economy: Fitch Solutions

The global cobalt supply chain is set to remain highly geographically concentrated in the coming years — in the DRC (Democratic Republic of Congo) for mine production and in China for refining — which will likely pose procurement challenges for battery manufacturers, market analyst Fitch Solutions finds in its latest industry report.

Yet the global cobalt industry is set to receive a significant boost from the worldwide shift to a green economy, Fitch says, as the ferromagnetic blue metal is a key component of rechargeable batteries and valued for its stability, hardness, anti-corrosion and high-temperature resistance characteristics.

Used historically as a pigment, due to its luminous blue colour, the metal’s main use today is in the precursors and cathodes of rechargeable batteries (56% of total consumption as of 2021). Employing cobalt as the cathode of rechargeable batteries efficiently improves their energy density, power, and performance as compared to batteries that lack cobalt.

Cobalt is also used in the manufacturing of nickel‐based alloys (13% of total consumption) which are used extensively in the aerospace industry, tool manufacturing (8% of total consumption) and finally smaller amounts in pigments, soaps and as catalysts.

The end use of cobalt is primarily in portable electronics (36.3% of global consumption), such as smartphones and laptops, while automotive applications also account for a major share (23%) and Fitch expects the latter to drive cobalt demand in the coming decades.

Cobalt is recovered mainly as a by-product of copper and nickel mining, with its availability dependent on the ongoing mining of its host metals. Stratiform sediment-hosted copper-cobalt deposits, mostly in the DRC and Zambia, represent the world’s largest source of cobalt, followed by nickel-cobalt laterite deposits (mainly found in Australia, Cuba, New Caledonia, Madagascar, Papua New Guinea and the Philippines) and lastly magmatic nickel-copper-cobalt-PGM deposits (mainly Canada, Russia and South Africa), Fitch notes.

While cobalt-rich crusts on the ocean floor could contain as much as 1 billion tonnes of cobalt resources, deep-sea mining is still in its infancy given obvious technological and economic constraints. Fitch expects prices of cobalt sulfate will remain on an uptrend in the coming 2-3 years as demand from battery manufacturers continue to outstrip supply despite a healthy pipeline of cobalt sulfate projects set to come online from 2023-2024 onwards.

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