The undisputed leader in the cobalt market is the Democratic Republic of the Congo (with three-quarters of the world’s pie), but the leap that Indonesia has made in obtaining this element is not trivial. China, the largest consumer of this raw material – present in mobile phones, computers, tablets and most electric car batteries – has supported Indonesia with investments and know-how to speed up the mining process. However, this has put pressure on international prices, which have collapsed in the last year due to higher supply, driven by weaker demand for electronic devices and the development of charging technology.
Indonesia jumps into cobalt
Experts note that the increase in Indonesia’s share in the global cobalt market will not be a temporary phenomenon. The country has the potential to increase production 10-fold by 2030 and about 14-fold by 2040. Projects around this raw material (which increases the efficiency of batteries and makes them more durable) are constantly growing. Only at the beginning of this year, a list of 42 new solutions appeared – compared to only four in 2021. The pressure comes from China, which seeks to bring the supply chain of this element, as well as nickel and lithium, necessary for battery development, closer. Chinese companies are making their way at lightning speed: the world’s largest nickel producer Tsingshan Holding Group, as well as cobalt refining giant Zhejiang Huayou Cobalt and battery leader Contemporary Amperex Technology (better known as Catl), have already landed in the Middle Kingdom. is the first producer of nickel, its share in the processing of cobalt (a by-product of the first raw material) has so far been negligible. The country was inexperienced with high-pressure acid leaching (HPAL), a technique for treating complex ores and concentrates that Chinese companies are leading the way. In 2020, prior to the introduction of HPAL, Indonesia produced just 1 kt (1 kiloton is 1,000 metric tons) of cobalt, compared to 9.5 kt last year. This allowed her to earn 5 percent. market, which seems a small number compared to 73 percent. Democratic Republic of the Congo, but it is a great improvement compared to other competitors who are losing momentum.
Global price drop
While the Indonesian industry is celebrating, the international market is shaking. In the second half of last year – after almost a year and a half of steady growth – the price of cobalt experienced a dramatic decline. In the first months of 2022, it remained at a high level and was close to reaching the record high of 2018. However, expectations quickly dissipated. From March 2022 to today, prices have fallen by over 64%. A combination of factors led to this, including increased supply from Indonesia. “Weaker demand for mobile devices and consumer electronics, easing logistical challenges, increased production at the Mutanda mine in the Democratic Republic of the Congo, and a shift in production towards lower cobalt batteries in the market” – these are the reasons for the fall in commodity prices according to Will Roberts, senior research analyst at RhoMotion, a UK-based consultancy providing energy transition analysis. “Demand for consumer electronics has dropped significantly over the past year,” adds Martin Jackson, Commodities Research Unit (CRU) expert on battery raw materials. “For example, in 2022, mobile phone sales fell by about 12 percent. y/y, and sales of personal computers by over 15 percent. y/y (…) Lithium-cobalt batteries account for the majority of this demand and are the main driver of consumption,” Jackson adds. percent light vehicle market share. “Western carmakers are increasingly using them because they are cheaper, more durable, and do not require nickel or cobalt,” says Fletcher-Manuel. And they will be a trend on the roads. “The electric vehicle market will be divided between low-end ones that use LFP (cobalt-free) and high-end ones that use nickel-based (cobalt-based) batteries,” adds Sam Adham, also an expert at CRU.
Stable market at least until 2030
Today, for example, Tesla already uses LFP in some Chinese vehicles that are also exported to Europe. Ford, for its part, has reached an agreement with Catl to manufacture these batteries in the United States and has just created the short-range Mustang Mach-E from the LFP. Despite the improvement in the economic situation in the industry, the demand for cobalt will not decrease in the coming years. By 2030, the Cobalt Institute even forecasts an increase of 108 percent. compared to 2022 – to almost 388 thousand. tonnes, which means that the market will more than double. The main driving force will be electric cars, which currently account for 40% of the total. demand, which will increase to two-thirds by the end of the decade. “The industry is bullish,” concludes Caroline Braibant, interim CEO of the Cobalt Institute. Source: elpais.es