The growth of electric vehicle (EV) market has contributed to the already enormous market appetite for raw materials used in the production of lithium-ion batteries. According to an article published by the Wall Street Journal on 29 January 2018, the UK commodities research firm CRU Group said that total annual demand for cobalt will be threefold of the current global production by 2030. At present, the annual cobalt production worldwide is estimated around 100,000 metric tons. CRU also predicted that the representation of battery-powered EVs in the global car sales will reach 10% in 2025 and then jump to 30% in 2030.
The expectation of the rapid development for EVs has been a boon for the cobalt market. London Metal Exchange (LME) reported the price of this metal has skyrocketed by 270% since the start of 2016 to US$80,000 per metric ton. Cobalt 27 Capital Corp., a Canadian company that focuses entirely on investing in cobalt mining operations, recently made headlines of financial news by announcing that it has accumulated a reserve of about 3,000 metric tons, thus creating one of the largest stockpiles for the metal in the world. Anthony Milewski, chairman and CEO of Cobalt 27, told the media and investors that his company, which has recently gone public, could become an acquisition target for either an automobile maker or a battery supplier.
The rising EV battery demand has injected new vitality into the Canadian mining industry. Canada is the world’s third-largest cobalt producing country, following China in second place and the Democratic Republic of Congo as the leader. Currently, Canada contributes around 6% of the global supply. Major mining companies that are prospecting for cobalt in the country include Vale S.A., Sherritt International Corp., Royal Nickel Corp., Fortune Minerals Ltd., and First Cobalt Corp.
Cobalt prospectors are also targeting silver mines because the metal occurs naturally in silver ores. Trent Mell, president and CEO of First Cobalt, told the Wall Street Journal that silver mining operations in the past tended to discard the accompanying cobalt minerals during ore processing because cobalt not valuable enough to be extracted along with silver. Mell’s company is now exploring a 110-year-old silver mining site in the Canadian province of Ontario for cobalt that is either discarded or still in the ground.
Presentation slides authored by Glencore PLC in December 2017 indicate bullish outlooks on the battery metal markets due to the electrification of transport vehicles. Glencore’s slides predict that in the 2020-2025 period, the annual EV sales will climb from 2.1 million to 10.1 million units, or from just 2% of the total annual new car sales worldwide to 10%. Then, the annual EV sales will spike up in the next five years after 2025 to 31.7 million units in 2030, accounting for 30% of the total annual sales. Glencore’s presentation in December also reveals that its own cobalt production will expand by 133% over the next three years.
A press statement released on 22 January 2018 by S&P Global Platts, a well-known information platform for the energy and commodities industries, made similar assessment. According to Platts, Bank of America Merrill Lynch (BofAML) Global Research had forecasted accelerated market growth for EVs in the early 2020s. As EV adoption increases, demand for oil is expected to fall sharply. Global Research also predicted that the global oil demand will peak in 2030, when EVs account for about 40% of total annual new car sales. The EV share figure will go up to 95% in 2050.
In a separate news report, BofAML also stated that the average sales price of EVs (excluding subsidy) could be on par with that of traditional fuel vehicles within six years (by 2023 at the latest). Furthermore, gasoline demand is forecast to peak in 2025.
(Credit of the photo at the top of the article goes to First Cobalt Corp.)