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(Wallace Refiners) – According to the Cobalt Market Report 2021 released by the Cobalt Institute (“CI”) this week, after remaining flat during the first stages of the Covid-19 pandemic, global cobalt market rebounded in 2021 growing 22% year-on-year (y/y) to 175 kt.
CI said that cobalt demand rose by 32 kt in 2021 alone compared to 51 kt in the 5 years from 2015-20, adding that growth was led by lithium-ion battery applications, accounting for 63% of annual demand and 85% of y/y growth.
Importantly, for the very first time in 2021, cobalt demand from electric vehicles (EVs) overtook other battery applications to become the largest end use sector at 34% of demand, totalling 59 kt. This was supported by EV sales doubling over 2020 levels, with China accounting for more than half of global sales and 64% of y/y growth.
Cobalt supply also returned to growth in 2021, with mine supply rising 12% y/y to 160 kt, after falling in 2020. The Democratic Republic of the Congo (DRC) produced 74% of mined cobalt in 2021 and accounted for 87% (15 kt) of annual growth. Output from the artisanal and small scale mining sector is estimated to have increased to 14.5 kt in 2021, 12% of the DRC’s total supply.
Primary refined supply increased 14% y/y to 144 kt as China remains the largest refined cobalt producer, providing around 70% of both 2021 refined supply and y/y growth. Finland, Indonesia and Madagascar combined provided 27% of refined supply growth in 2021.
“Robust market performance and ongoing tight conditions were highlighted by cobalt’s price growth in 2021 – European metal prices doubled through the year from $16/lb in January to $32/lb by the end of the year,” the authors of the report said.
According to the report, looking ahead, cobalt demand is expected to continue rising rapidly as the EV transition gains pace – demand is forecast to approach 320 kt in the next 5 years from 175 kt in 2021, with 70% of growth expected to come from the EV sector.
Supply will keep pace with demand in the short term, however supply chain bottlenecks remain a key risk. From 2024, the market is forecast to shift back into a deficit as supply growth fails to keep pace with demand. Prices will remain elevated to incentivise further investment and prevent wide deficits developing, the report concluded.
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