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The surge in the cobalt price, which
increased by 119% in 2021, is expected to continue unabated this year, with
cobalt supply increasingly unable to keep pace with demand, diversified mining
major Eurasian Resources Group (ERG) CEO Benedikt Sobotka said in a statement
on January 27.
The global price of cobalt more than
doubled last year, reaching its highest levels since 2018, he noted.
“The market is severely short of the blue
metal. There are no discernible signs of any fundamental easing, with prices
remaining on an upward trajectory as consumers skirmish to secure sparsely
available spot units – a situation that will undoubtedly persist throughout
2022 and beyond,” Sobotka remarked.
He said the short supply was underscored by
significant demand growth in the electric vehicle (EV) sector.
“The pace of EV adoption shows few signs of
losing momentum, being supported by the global transition to a greener future.
We firmly believe that future EV sales will continue to exceed analysts’
expectations, driven by governments’ ambitious adoption goals and
manufacturers’ aggressive sales targets,” Sobotka said.
He said ERG expected EV sales’ market
penetration to exceed 50% by 2030, which is in stark contrast to most analysts’
“conservative” forecasts of about 30%.
“Perhaps an even more powerful force for
change will be consumers’ booming receptiveness to EVs, incentivised by their
performance benefits, lower running costs, improving range, strong
environmental credentials and – perhaps most importantly – falling prices
relative to their petrol and diesel counterparts,” Sobotka pointed out.
However, the EV sector is not the only
cobalt demand driver. Cobalt-bearing lithium-ion batteries are increasingly
being used in various sectors, from mobile electronics to battery-based energy
storage systems.
Sobotka said demand from traditional cobalt
metal end-use sectors, which account for about a quarter of overall
consumption, is set to undergo a boom this year. This boom would be spurred by
the recovery of the aerospace sector after the downturn caused by Covid-19
travel restrictions.
The International Air Transport Association
forecasts that global air travel demand will grow by 52.5% year-on-year in
2022. Additionally, aeroplane manufacturers Boeing and Airbus have both
announced ambitious production targets for the year ahead.
Sobotka attributed cobalt’s demand/supply
discrepancy to new gigafactories popping up faster than new industrial-scale
cobalt mines can be developed. Battery production capacity was expected to
quadruple by 2025, despite cobalt supply lagging far behind.
“Downside risks surround the timely
commissioning and ramp-up of many existing projects, in view of global
shortages of mining equipment and the adoption of the historically troublesome
high-pressure acid leach technology at numerous mine projects in Indonesia,”
Sobotka pointed out.
He added that the responsiveness of
artisanal cobalt supply to elevated prices has been reduced by consumers’
growing scrutiny of the cobalt supply chain, facilitated by new blockchain
tracing solutions – such as the Battery Passport and Re|Source – as well as the
Democratic Republic of Congo government’s efforts to introduce stronger
controls in the sector.
Finally, Sobotka noted that the movement
and availability of cobalt raw materials continued to experience logistical
disruptions, which he said were likely to persist throughout the course of this
year.