The rush in demand for cobalt has sent the price soaring and now large battery manufacturers are looking to lock up their share of the global cobalt supplies at source.
Companies developing resources of cobalt supplies that could offer solutions include Katanga Mining Limited, Fortune Minerals Limited, eCobalt Solutions and Bankers Cobalt Corp.
Battery makers are obviously reacting to the potential shortage as a result of hot electric vehicle (EV) demand and are searching for ready partners with cobalt production opportunities.
The DRC (Democratic Republic of Congo), which produces roughly two-thirds of the world’s cobalt, also recently voted to raise taxes and royalties on profits and metals produced. That includes cobalt. That’s in addition to the fact that the DRC presents serious impediments over human rights violations in mining cobalt.
Several companies are already looking to expand the socially responsible mining of cobalt to increase supplies including Katanga Mining Limited, eCobalt Solutions, and Fortune Minerals Limited.
Some junior miners are seeking a work around for the question of sourcing by seeking only socially responsible sources. Bankers Cobalt Corp. for example has taken the advance steps of putting the appropriate policies and procedures in place to manage the risks of operating the DRC.
EV demand is pushing the envelope
The proliferation of EVs led by Tesla Motors has resulted in a boon for previously overlooked metals; mainly lithium, cobalt and nickel. These metals loosely known as “battery metals” are critical in the making of rechargeable batteries that are used to store power in EVs as well as a wide range of consumer electronics.
Cobalt is particularly susceptible to supply constraints because of a combination of factors.
First, about 97 percent of all the cobalt in the world is produced as a by-product of copper mining, which means that demand spikes of cobalt themselves are not enough to necessitate massive capital outlays for supply expansion.
Cobalt mining is also highly concentrated in volatile regions, with the DRC contributing about 60 percent of global cobalt production.
With conflict in the region rising, cobalt exports have been affected significantly. Human rights violations such as child labor and extremely low wages in DRC have also plagued the industry, and many socially responsible companies even consider Congolese cobalt untouchable at this point.
In light of this supply bottleneck, battery companies across the globe are rushing to secure enough cobalt supply to keep their operations in line.
In South Korea, local electronics companies including LG and Samsung that consume high volumes of cobalt have started to put long-term arrangements in place that will help them get new sources of the metal.
SK Innovation entered into a seven-year supply agreement for cobalt and nickel with metal developer Australian Miners.
Recycling another factor
Other companies are pursuing strategic partnerships with recycling firms that are able to recycle cobalt collected from discarded smartphones.
It is estimated that recycling batteries from discarded Samsung Galaxy Note 7 alone would yield as much as 150 tons of cobalt.
Indeed, cobalt recycling has been a major factor in offsetting scarcity of cobalt and this will come into play more in the future.
As the first generation of mass produced electric vehicles begin to get discarded in the next decade, a vast amount of recyclable cobalt will return into the supply stream, helping the process into even higher gear.
Bringing on cobalt: the real soution
The option of bringing more primary cobalt mines into operation holds what is the most viable way forward.
A number of junior companies have identified new cobalt reserves, and these are likely to be some of the most prominent new sources brought online in a few years.
eCobalt is developing a project in Idaho to process “pure clay” cobalt which has a capacity of 1500 tons of the metal per year. Global Energy Metals is also looking into the possibility of reviving production at Werner Lake in Ontario, which has not been in operation since the 1940s.
By 2025, it is estimated that global cobalt production will be about 150,000 tons, when existing alternatives are fully active.
Regardless of the relief offered by recycling and possible primary cobalt mining, battery companies are going to need to join forces now as the market firms up and reaches a consensus on just how much cobalt we are going to need and what the market is willing to pay for this scarce material.
Potential Comparables
Katanga Mining Limited, through its subsidiary, Kamoto Copper Company SA, engages in the copper and cobalt mining and related activities in the Democratic Republic of Congo. It is involved in the exploration, mining, refurbishment, rehabilitation, development, and operation of the Kamoto/Mashamba East mining complex; the Kamoto Oliveira Virgule copper and cobalt mine; T17 open pit and T17 underground mines; various oxide open pit resources; the Kamoto concentrator; and the Luilu metallurgical plant. The company is based in Whitehorse, Canada. Katanga Mining Limited is a subsidiary of Glencore International AG.
Fortune Minerals Limited explores for and develops specialty metals, base metals, and precious metals in Canada. The company explores for gold, cobalt, bismuth, copper, silver, lead, and zinc deposits. It primarily holds 100 percent interest in the NICO gold-cobalt-bismuth-copper project located in the Northwest Territories. Fortune Minerals Limited was founded in 1988 and is headquartered in London, Canada.
eCobalt Solutions Inc. engages in the exploration and development of mineral properties in Canada, the United States, and Mexico. It primarily explores for base and precious metals, and uranium, as well as copper, gold, silver, lead, and zinc deposits. The company owns 100 percent interest in its primary asset, the Idaho Cobalt project that includes a mine/mill site located in Lemhi County, Idaho, producing battery grade cobalt salts for rechargeable
battery and renewable energy sectors. eCobalt Solutions Inc. was founded in 1988 and is headquartered in Vancouver, Canada.
