As electric vehicles continue to gain popularity, concerns are rising about the future supply of cobalt, a crucial component in rechargeable batteries. Miners and analysts are predicting a potential crunch in cobalt supplies in the early-to-mid 2020s, leading to increased interest in exploring for the mineral outside of the Democratic Republic of Congo (DRC), which currently produces the majority of the world’s cobalt.
The DRC, known for its cobalt production as a by-product of copper mining, has recently implemented a new mining code that raises royalties and taxes on foreign mining companies. Additionally, reports of child labour in some cobalt mines have raised ethical concerns within the industry and among buyers.
Exploration and development companies are now looking at projects in countries such as Namibia, Canada, Indonesia, and the United States to diversify the global cobalt supply chain. However, more investments will be needed to bring these projects to fruition, as demand for cobalt is expected to outpace supply by 2022.
Analysts predict a deficit of at least 90,000 tonnes of cobalt by 2025 to meet the growing demand from the electric vehicle industry. This surge in demand has already driven cobalt prices on the London Metal Exchange to over $90,000 a tonne, up from $22,000 in 2016.
With the electric vehicle market expected to take off around 2020, companies are scrambling to secure future supplies of cobalt. Discussions between major industry players and junior miners, many years away from production, are already underway as the race for cobalt heats up.
