Cobalt Demand Fell As A Result Of A Scarcity Of Semiconductor Chips, And Problems At A South African Port Have Continued To Disrupt The Supply Chain

When semiconductor chips were scarce, demand for cobalt dropped, and problems at a South African port further disrupted the supply chain.

S&P Global Intelligence says the world’s leading cobalt producers increase output, reducing the value of the metal’s market deficit.  Since electric vehicle (EV) sales increased this year, the demand for cobalt has pushed large manufacturers to seek an expansion of production from DRC mining operations, according to S&P Global Platts (S&P).

Battery metal, which offers battery cathode stability but is pricey and associated with claims of human rights violations by artisanal miners in the DRC, has started to be looked for as an alternative by some EV-maker. Rechargeable batteries in automobiles and on the grid will likely continue to use nickel for the foreseeable future, according to Market Intelligence.  According to S&P Global Market Intelligence’s most recent prediction, an anticipated 1,800-ton deficit of refined cobalt is projected this year; according to S&P Global Market Intelligence’s most recent forecast, which was released on September 22.  Global refined cobalt output is predicted to climb by 38.5% between 2021 and 2025, reaching 223,000 tonnes, as numerous production sites expand and restart. High-profile mining companies Glencore and China Molybdenum have announced plans to increase output at DRC mines in the following years. Last year, the DRC provided 68.6% of the world’s 139,480 cobalt supply, followed by Australia with 4.2% and the Philippines with 3.3%.

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S&P Market Intelligence said on May 26 that Glencore, the Swiss commodities giant, might restart production at its DRC copper-cobalt Mutanda mine. A spokesperson for Glencore refused to comment; however, the company did mention the mine on a recent earnings call.

Increasing Chinese production and overstock drove down the price of cobalt, forcing Glencore to cease operations and shut it down, although it aims to reopen it next year.

Tenke Fungurume, China Molybdenum’s 80 percent-owned copper-cobalt mines in the Democratic Republic of the Congo, will see a $2.51 billion investment by 2023, expanding its cobalt production capacity to 17,000 tons. This mine is expected to produce 15,436 tonnes of cobalt in 2020, according to Market Intelligence data.  A scarcity of semiconductor chips has reduced the demand for cobalt. According to Market Intelligence analyst Alice Yu, the ongoing spread of the covid-19 and malfunctions at a port in South Africa has continued to upend numerous aspects of the supply chain.  Compared to July of 2020, China imported less cobalt from the DRC by more than a fifth.  S&P estimates that by 2021, supply will be unable to keep up with demand, and prices would thus rise.

According to Market Intelligence statistics, cobalt prices would rise by 50% in 2021 compared to the previous year. Still, experts predict that prices will fall in 2022 as supply chain limitations relax and additional production from enlarged mining operations in the DRC join the marketplace.