Lithium-ion battery (LIB) demand, particularly for electric vehicles, is projected to increase by over 300% throughout the next decade.
With these expected increases in demand, cobalt dependent technologies face the risk of significant impact from supply concentration and mining limitations in the short-term.
As many as one million electric vehicles (EVs) were sold in China in 2018 alone.
There are many questions regarding the evolution of that demand, which types of battery chemistries will be leveraged to meet EV demand, the supply chain impacts based on mining and refining capacity, the environmental and social impacts of growing mine output, and the recycling infrastructure to support end-of-life materials management.
This paper provides a detailed investigation of new cobalt supply, the potential role of secondary supply, as well as demand across a variety of applications. It also explores how supply of cobalt will shift to meet this demand through 2030; geographically and by source.
LIB uses, concentrated in consumer electronics and EVs, are currently the largest end use of cobalt (accounting for 50% of global demand).
Current estimates locate approximately 60% of all mined cobalt production in the Democratic Republic of the Congo (DRC); this will likely reach upward of 65% before 2030.
This presents a concern, because according to the World Governance Indicators developed by the World Bank Group, the DRC has consistently ranked in the lowest 10 percentile among all countries it investigates in terms of political stability, government effectiveness, rule of law, and control of corruption.
Although China has a small share in terms of direct mining production, it indirectly controls 19−26% of mining production through ownership of mining projects mostly located in the DRC
Cobalt processing is also heavily concentrated; 2017 numbers indicate that China is responsible for 58% of refined cobalt, 91% of which originates in the DRC. Activity in the DRC raises additional concerns because of artisanal mining, which is estimated to account for 10% of annual cobalt production in the country.
This unregulated, often unrecorded, practice has led to environmental, social, and health concerns particularly around land contamination, water pollution, child labour, and social unrest.
EV batteries will reach end of life at 80% of their initial capacity, which has been reported to average around 8−10 years. For laptop computers, lifespan is reported to average around 4 years; for mobile phones including smart phones, this is found to be around 2.5 years.
Projections in the paper predict that in a scenario where uptake for EVs is high, LIB cobalt demand accounts for 70% of battery demand by 2030, a significant shift in the market for cobalt.
Cobalt mining in the DRC will continue to provide 62−70% of global production from 2018 to 2030. Australia, Canada, Cuba, Madagascar, the Philippines, Russia, and Zambia will each account for 2−6% of global production.
For demand to continue to be met, attention should be paid to sustained investments in refined supply of cobalt as well as investments in secondary recovery. Secondary supply alone is not enough in the short term to meet demand, and there is opportunity for increased mining efficiency.
One source of cobalt that we have not yet considered is from deep sea mining. Other academic studies estimate that deep sea deposits potentially host a significant amount of recoverable cobalt, exceeding that found in terrestrial deposits
Polymetallic nodules contain 0.25% cobalt and cobalt-rich ferromanganese crusts contain around 1 or 2%. Most prospective deep-sea mining discussions revolve around Solwara in Papua New Guinea, the Clarion Clipperton Fracture Zone (CCZ) in the central Pacific, and the Cook Islands.
The viability of these sources playing a role before 2030 is unlikely for a variety of reasons stemming from regulatory issues, as few of these sources are in national waters. However, the authors hypothesize that beginning in the mid-2020s there may be 3−5 contractors who are able to extract some cobalt from this source – around 6 ktonnes per year per contractor.
In the longer-term, the CCZ is known to contain over 1.5 million tonnes of cobalt reserves and resources at an ore grade of 0.25 or 0.3%, making it one of the larger deposits in the world
Another area of future study to explore is the longer-term supply chain considerations to meet climate goals. This transformation will involve all sectors of the economy.
The upper bound assumption for EV adoption by 2030 used in this paper aligns with the International Energy Agency (IEA) New Policies scenario – cobalt EV demand of 350 ktonne/yr to reach 30% market share for EVs by 2030.
This demand, combined with other sources of demand (even using our low estimate of those sources), would exceed even the upper bound on supply modelled in this paper.
With the case of cobalt, we see a strong example of how advanced energy technologies are enabled directly by, or designed around, a set of materials and are therefore subject to the supply chain issues that accompany those materials. Given the demand growth for LIBs, driven by a continued drop in cost, and the societal goal to decarbonize the transportation fleet, attention should be given to the supplies of these materials.
There is supply chain risk associated with supply of cobalt given its geographical concentration. Further factors such as political instability in the DRC, small quantities of secondary supply entering the market, the degree of integration among firms within the cobalt extraction pipeline, potential for hedging and speculation, and rapid demand increases in battery sectors may act to increase the gap between supply and demand past 2030.
The authors conclude by encouraging policy makers to consider material criticality risks in the context of existing risks from maintaining status quo vehicle technology use (e.g., worsening climate change), and risks of pursuing other viable decarbonization solutions.
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