Cobalt: Mining the Energy Future
    Category: Column By : Alberto Migliucci Read : 1230 Date : Wednesday, November 30, 2016 - 12:03:34

    Various historical periods have been defined by the materials people used, such as the “Iron Age” and “Stone Age.” The present day “Digital Age” is going to see the primacy of new “energy metals,” which will become the building blocks of disruptive technologies that will change the way people drive and power their buildings. This new age will result in higher dependence on renewables and breaking away from traditional infrastructure networks.

    In the past decade, the progress of lithium-ion batteries has been essential to modern technology, powering smartphones, laptops, tablets, medical devices and power tools. Lithium-ion batteries are lighter and store more energy than conventional “dirtier” lead-acid batteries. Lithium-ion batteries are seen as “green.” The real growth story for these batteries is only getting started, with the emergence of electric vehicles (EV), and the energy storage market, expected to be the backbone of the new energy economy.

    Current industry opinion anticipates that up to 40% of vehicles sold in 2040 will be electric, from a base of less than 1% of global sales today. A recent Deutsche Bank report states the global battery consumption has increased 80% in two years to 70 GWh in 2015, of which EV accounted for 35%. It is expected global battery demand will reach 210 GWh in 2018 across electric vehicles, energy storage and traditional markets. By 2025, global battery consumption should exceed 535 GWh.

    While lithium grabs the headlines because of its use in batteries, it is just one of the minerals being used, and in fact, isn’t even the most common element in most lithium-ion batteries. Depending on the battery type, the strategic mined metals include cobalt, graphite, nickel, zinc, copper, manganese and aluminium, and these will likely become increasingly important raw materials in the new energy economy.

    If you look at the constituents of the lithium-ion battery, Petra Commodities believes cobalt is the next standout. There is no doubt that lithium has grabbed the media headlines lately, with the price having soared to multi-year highs (from about $5,000 to $20,000 per tonne). However, cobalt has been a much more modest performer, with the LME price actually dropping to a multi-year low of $21,750 a tonne in February, before staging a rally to $28,750. However, this price is still well below the $33,100 cobalt fetched in August 2014.

    Cobalt is an important part of the battery market and demand for the metal is expected to grow at an average annual rate of about 6% over the next five years. These remarkable demand figures haven’t flowed through to the price, because as of yet cobalt hasn’t managed to return to its peaks in 1977 and prior to the global financial crisis in 2008. The U.S.

    Geological Survey’s recommendation to the U.S. Defense and Logistics Agency (DLA) to add the cobalt compounds to the National Defense Stockpile for the first time in 20 years underlines how critical the metal is to the U.S. Essential to its economic health and national defence, the U.S. currently consumes approximately 13% of the world’s cobalt supply, with this projected to grow to 15% by 2020.