Lords of cobalt, hear our prayer

Cobalt used to be a byproduct of copper mining, used in everyday products like tires and magnets. But that all changed when someone discovered it’s ability to stabilize the lithium in batteries for electronics like cell phones and battery operated cars. Now it’s one of the most sought after metals on the periodic table. Which has implications for big tech firms like Apple and Samsung.

At the beginning of 2017, $32,500 would buy you one ton of cobalt. Today you’d have to fork out $81,000. Demand comes from consumer electronics and using batteries as grid storage for renewable energy sources. But the biggest driver by far is for electric vehicles. In July 2017, the UK announced plans to phase out sales of new petrol and diesel cars by 2040. Meanwhile, India plans to replace its entire car fleet with electric models by 2030. In California, the official target for electric vehicles is 5 million by 2030. And in China, where electric vehicles are seen as a solution to its smog-ridden cities, subsidies are offered to consumers and a reward system for manufacturers is being introduced.

Cobalt crunch

cobalt | lithium ion battery sales chart

So now we have a battle to secure the metal supply for consumer electronics and electric cars. First, we learned Apple, Tesla and others were in direct talks with minors. Apple’s deal is rumored to secure several thousand metric tons of cobalt every year for 5 years or more. Each iPhone uses about 10 grams of refined cobalt. That’s about the size of a Mike and Ike. In contrast, electric cars use 1,000 times more.

We are seeing increasing mining interest in Australia, Canada, and the Philippines. But most of the world’s known supply of cobalt currently comes out of the Democratic Republic of the Congo, and that is another problem. The DRC is a very unstable country in Central Africa, notoriously corrupt and often employing child labor.

We are also learning of earnest programs to recycle cobalt out of used phones. Samsung SDI, another affiliate that supplies batteries to carmakers including BMW, plans to recycle cobalt from used mobile phones by buying a stake in a recycling technology company.

Quite simply, unless someone engineers cobalt out of the lithium-ion battery, the world is going to need a lot more cobalt. Consumer electronics won’t care about the cost of the lithium ion battery in a phone. It is all about the real estate it takes up. It’s a different story for the electric car makers.

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