Technology and battery metals
consumed. NMC batteries contain 10-20% cobalt, with each new electronic car using 5-10 kilograms of cobalt. This makes cobalt the most ideal market to study the effects of the rapidly growing EV industry.
3. Demand and Supply of Cobalt
Amongst other commodities, cobalt has experienced one of the most pronounced price volatility in recent years.
Average Cobalt Price per MT
Cobalt prices before 2016 had been relatively calm despite growing interest in EVs, largely due to a lack of mainstream retailing of consumer- friendly EVs. After Tesla’s release of the first mainstream electronic cars, prices have rocketed to $95,000 per MT due to the hype for the potential of the EV sector. In the 2 nd quarter of 2018, however, cobalt prices plummeted down to 70% on a year-to-year basis (current spot price is at ~31,000 per MT), within a few months. To understand what exactly is behind this collapse, we first need to look at the movement of demand and supply for cobalt. The supply of cobalt is particularly interesting in that despite cobalt being a critical raw material fundamental to industry, as classified by the USA, cobalt supply is still highly inelastic even though cobalt is not particularly rare, ranking 31 st in global abundance. This is largely due to the fact that 98% of the production of cobalt is from the by-product of copper or nickel production. This helps to explain why the supply of cobalt has been rising since the 2000s despite low prices – copper production especially has been massively boosted since 2000. The large existing stockpiles of cobalt, however, did not stop people from capitalizing on high prices in 2017. Owing to 60% of cobalt being sourced from the Domestic Republic of the Congo (DRC), many Congolese saw this as an opportunity to profit and to leave the highly unstable DRC. This supply surge of cobalt has been fuelled by both miners looking to profit, as well as from the informal industry where private backyards were turned into artisanal mines. However, as it became apparent that growth rates of the EV sector were not going to be as high as expected, prices for cobalt started plummeting as miners rushed to sell off their existing stock of cobalt. This then led to a supply plateau as miners and the informal market saw the dipping prices and held off production of cobalt in exchange for opportunities for more profit elsewhere. Unusually for a commodity, cobalt had strong demand growth every year since 2006, with an average annual growth rate between 2007 and 2017 at 7.6%. This was largely due to the slow transition towards using lithium-ion batteries and the boom of touchscreen phones which require higher energy density
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