The Company believes that battery metals arena particularly cobalt represents a huge opportunity considering the increased global demand fundamentals.
The unique properties of cobalt and cobalt products are responsible for its extensive applications in energy storage, industrial and other areas. Cobalt is an integral metal used in the cathode (positive terminal) of a lithium-ion battery. Cobalt’s physical properties of improving energy density and safety continue to make it an integral component of a lithium-ion battery. Currently, cobalt is found in three of the five common chemistries used in the lithium-ion battery market. Cobalt is essential to the stable and efficient operation of an electric battery for a car. Demand for electric vehicles is soaring and the global fleet is likely to more than triple to 13 million by the end of the decade from 3.7 million last year. The growth in demand is forecast to see cobalt demand increase 2-3 x over the next 10 years, and consequently, continued price strength is almost universally forecast.
The major concentrations of known cobalt deposits are in the DRC. The US Geological Service estimates that over 50% of the world’s cobalt resources are in the DRC, with over 2/3 of current production sourced there. Cobalt almost universally occurs as a by-product with other metals. The second largest source of supply is as a by-product of nickel production.
As the most expensive metal in the battery, there are ongoing attempts to thrift the quantity of cobalt in battery, but this is constrained by battery stability issues (with too much nickel and too little cobalt, the battery can combust and explode). This is further enforcing the roll cobalt plays in electric vehicle power. However, it must also be noted that there are moves towards developing cobalt free electric vehicle batteries for key players such as Tesla.
Electric vehicles represent the large growth in demand for cobalt, but high-quality alloys are also a significant source. China imports 80% of DRC cobalt, which is largely driven by demand for electric vehicles which are expected to take just over a quarter of vehicles sold in the nation by 2030. China already produces in excess of 90% of the world’s electric buses.
Cobalt remains to be the main component in an electric car battery (around 10 kilogrammes of cobalt is used in a battery). Announcements from major governments fuelled the cobalt market, France, the UK and potentially China outlined plans to ban all petrol/diesel fuel cars by 2040. In addition, several carmakers said they will electrify most of their models by mid-2020s, including Volvo, BMW, Mercedes and Ford.