Cobalt – Another Unstoppable Technology MetalBy Bodo Albrecht
Friday October 02, 2015 15:53
(Kitco News) - Marketing highlights like Tesla’s presentation of the “Model X” SUV emphasize the slow but steady growth of the electric vehicles (EV) market, positively, impacting technology metals.
Cars like the “Model X” and the “Model 3” to be unveiled in spring of next year are unthinkable without lithium-ion batteries, and so are practically all of our battery-powered electronic gadgets. What we forget is that these batteries do not only contain lithium as the cathode material. Market insiders are now emphasizing that these other metals, rather than lithium, are the ones to watch as an investor.
Tesla’s batteries, for instance, contain lithium, nickel, cobalt and aluminum as the cathode material. Almost 10% of the 544kg battery pack in each vehicle is cobalt, that’s 50kg per car.
Worldwide cobalt production in 2014, according to the U.S. Minerals Survey, was 112,000 tonnes, with exactly 50% or 56,000 tons coming from the Democratic Republic of Congo (DRC), one of the most crisis-ridden regions on the planet.
On top of general supply concerns, all major corporations are therefore confronted with ethical considerations and the Dodd-Frank Act. The U.S. is not even listed in the report as a contributor to world supplies but estimated to possess total reserves of just 37,000 tonnes. Tesla and Panasonic, the vehicle company’s technology provider, will not be able to domestically procure the cobalt needed at the new “Gigafactory” as they had hoped.
William Hattan, an investment broker specializing in technology metal investments, warns: “More than 40% of the world’s cobalt production already go into the battery market. The rest goes into super alloys used in the aircraft and space industry, all of which are seeing strong growth”.
Cobalt prices were lingering around US$ 13 a pound for a long time but prices are on the move. Not only did Glencore announce an 18 month suspension of its operation in the DRC. China’s State Reserve Bureau recently said it purchased 400 tonnes at $ 32,931 per ton, nearly $15 a pound, leading to increasing prices everywhere.
“With demand steadily increasing and supplies being reduced mid-term, I see the market undersupplied by at least 6,000t next year,” concludes Hattan. First Hafnium, now Cobalt – technology metals seem set for a recovery.