Gregory Carson Engineering – Engineering services for high-value industrial and strategic minerals

COBALT

Cobalt is a hard, lustrous, silver-grey metal with a high melting point. It is a minor element of the earth’s crust and vital to a wealth of high-technology applications. Besides application as an electrode material in lithium ion batteries, cobalt has many applications including magnetic, wear-resistant and high-strength super alloys (such as those used on gas turbine blades and jet aircraft engines), catalysts, chemicals and coloured dyes.

Cobalt is traded on the London Metal Exchange. It is mined as a mineral concentrate and sold as both a metal and chemical product. Chemicals account for 58% of cobalt output, a market which has risen to dominance over the last decade through the increase in global battery domination.

Presently cobalt is a by-product sourced primarily from copper and nickel mining rendering cobalt output highly dependent on the production of these primary metals.

It is estimated that demand for cobalt will continue to grow year on year with many analysts believing it will soon be in a deficit situation. 55% – 60% of the world cobalt supply is from the politically instable Democratic Republic of Congo which has come under intense scrutiny following reports from Amnesty International that around 20% of this supply was sourced using artisanal mining and child labour. This along with falling copper and nickel prices causing supply to be cut in the DRC, means that this cobalt supply source may no longer be sustainable.

Cobalt consumption by the rechargeable batteries sector represents the largest single source of cobalt demand. The rapid growth in demand is attributed to the increasing popularity of Li-ion batteries in electronic devices (smart phones, tablets, portable PCs, power tools). The developments in new applications such as electric vehicles and home energy storage units show that the real growth in cobalt demand is yet to come.

Cobalt is a critical functional component to a lithium ion battery and makes up an average of 10-15% of the cathode. Cobalt chemicals are used as a key component in three major lithium ion battery chemistries: Lithium cobalt oxide (LCO), lithium nickel manganese cobalt oxide (NMC) and lithium nickel cobalt aluminium oxide (NCA). The latter two are rapidly becoming the technology of choice for the EV sector. Both, projected significant growth in cobalt consumption from the battery sector and the instable supply situation have created an interesting opportunity for new projects with a focus on high grading and primary cobalt resources entering the market.

COBALT RESOURCES

Cobalt is indispensable for a number of growing high tech applications including high performance lithium ion batteries and super alloys. The majority of world cobalt reserves are located in the African Copper Belt in the Democratic Republic of the Congo (DRC) and Zambia. Approximately 65% of the world cobalt supply is mined from the DRC. Following the Washington Post article in September 2016 the industry using DRC sourced cobalt is under pressure. Australia, Canada, Cuba, Zambia, New Caledonia, Russia and the Phillipines hold much of the balance of global cobalt reserves being mined as a copper and nickel by-product. As of 2014, the world production of cobalt was 123.000 mt.

Cobalt generally occurs in primary copper / nickel sulphide deposits (carrollite, skutterudite, cobaltite) or nickel-bearing laterites (asbolane, heterogenite). This means that cobalt is usually produced as a by-product of copper and nickel mining activities thus heavily dependent on the price regime and economics of these metals. Of current production sources, approximately 55% of cobalt production is copper related, 42% is nickel related and only 3% are being produced by primary cobalt operations. Due to the significant growth in cobalt consumption from the battery sector and the imbalance of cobalt output from copper and nickel mines not meeting actual demand, at the current supply situation future shortages are expected.

This presents an interesting opportunity for junior mining companies to develop new cobalt resources with a focus on developing single play, high grading and primary cobalt resources.