Global Cobalt Demand Soared to 175,000 mt in 2021, with Electric Vehicles Becoming the Largest Source of Demand for the First Time

SHANGHAI, May 19 (SMM) - According to the Cobalt Market Report released by the Cobalt Institute on May 17, electric vehicles have surpassed smartphones and personal computers to become the largest source of cobalt demand for the first time. The report pointed out that global cobalt demand increased by 22% to 175,000 mt in 2021, a record high growth rate, and this upward trend will continue. Electric vehicles consumed 59,000 mt of cobalt in 2021, accounting for 34% of total demand, as sales of electric and hybrid vehicles doubled; cobalt demand from mobile phones was 26,000 mt; and laptops and tablets accounted for 16,000 mt of cobalt demand. The Democratic Republic of Congo remained the largest source of cobalt supply, accounting for 74% of global mineral supply. China remained the world's largest cobalt refining country (72% of primary production). Indonesia was the largest refined cobalt production growth market after China and is expected to account for a quarter of total refined cobalt growth over the medium term.

In 2021, cobalt-containing battery chemistries accounted for three-quarters (74%) of the global EV battery market - largely due to cobalt ensuring its superior energy density, safety and performance.

"As electric vehicles continue to revolutionize green and sustainable transportation, cobalt-containing batteries are the technology of choice for many automakers in Europe, North America and China," said Adam McCarthy, director of the Cobalt Institute.

David Brocas, head of cobalt traders at Glencore and chairman of the Cobalt Institute Executive Committee, said: “Ensuring access to raw materials is critical if the world is to make a sustainable and just transition to a greener future. Cobalt's role in batteries and recycling makes it one of the key materials for a climate-neutral future."

The report expects cobalt demand to rise to 320,000 mt over the next five years from 175,000 mt in 2021 as the auto industry produces more electric vehicles. While cobalt supply is expected to increase this year and into 2023 and the market is more balanced, supply will start to slow from 2024. "Supply will grow by an average of 8% a year from 2024 to 2026, while demand will increase by more than 12%." Electric vehicles will account for half of cobalt demand by 2026, the report said.

In terms of price, according to data released by the Wind, the average price of cobalt ore in 2021 rose to 378,000 yuan/mt, a year-on-year increase of 41.4%.

Driven by demand and sharp fluctuations in raw materials, auto giants also paid attention to cobalt resources in the mining boom.

On April 12, General Motors issued a statement saying that the company had reached a cobalt supply agreement with Glencore. The Murrin Murrin mine in Australia will supply GM with cobalt over several years under the agreement, which did not specify the amount or price.

GM plans to use cobalt, an extremely heat-resistant metal, in its own batteries, which are expected to power electric vehicles such as the Chevrolet Silverado EV, GMC HUMMER EV and Cadillac LYRIQ.

On March 21, Volkswagen Group (China) announced that it had signed two memorandums of understanding on strategic cooperation with Huayou Cobalt and Tsingshan Group, and planned to set up a joint venture with the latter in Indonesia and Guangxi respectively, to further consolidate its position in the battery value chain in China.  

Volkswagen China said Volkswagen, Huayou Cobalt and Tsingshan Group plan to establish a joint venture company in Indonesia. It is expected that the total raw material production capacity of the joint venture company can meet the supply of nickel and cobalt raw materials required for 160GWh batteries after full production; In addition, Volkswagen also plans to establish a joint venture with Huayou Cobalt, specializing in nickel and cobalt sulphate refining, precursor processing and cathode material production, to help Volkswagen further optimize battery costs.

In addition, as early as 2020, Tesla purchased cobalt raw materials from Glencore, the world's largest metal miner. According to the long-term cooperation agreement between the two parties, Glencore will supply Tesla with 6,000 mt of cobalt per year.

Essence Securities said that the short-term cobalt price will be affected by the weak consumption of digital and power electronics and the expected increase in supply in the short term. With the resumption of downstream production and digital electronics gradually coming out of the off-season, cobalt prices are expected to remain high on the back of low raw material inventories.