Refined cobalt consumption has been steadily increasing over the past couple of years with 83,000 tonnes in 2013, 89,000 tonnes in 2014, 90,150 tonnes in 2015 and 98,000 tonnes in 2016. Global cobalt demand is expected to exceed 100,000 tonnes for the first time in 2017 as the market begins to face supply deficit. Demand for cobalt used in metallurgical applications is forecasted to grow steadily from 36,690 tonnes in 2016 to 50,000 tonnes in 2025, driven by the aerospace industry. Demand for cobalt used in non-metallurgical applications is forecasted to grow at a faster rate, at 6.7% compounded annual growth rate (“CAGR”) from 2015 to 2020 and 5.7% CAGR from 2020 to 2025.
End user consumption of cobalt will also change rapidly by 2020, with the most significant change in demand by lithium ion batteries used in electric vehicles (“EVs”) by 114%:
The main three types of batteries in the rechargeable lithium ion batteries market is comprised of the lithium cobalt oxide (“LCO”), nickel manganese cobalt (“NMC”) and lithium nickel cobalt aluminum (“NCA”) cells. These three types of batteries made up 75% of the rechargeable batteries market share in 2015. LCO cathode contains the highest cobalt by weight in the form of cobalt oxide followed by NMC and NCA batteries which contains cobalt in the form of cobalt sulfate. LCO batteries are the largest consumer of cobalt and accounts for 28% of global consumption. NMC and NCA batteries, used in EVs, is expected to have the highest demand growth in the mid and long term range forecast. The growth in the EVs market will increase consumption of cobalt sulfate to 27,500 tonnes in 2020 and 41,500 tonnes in 2025, accounting for roughly 40% of chemical cobalt consumption in 2025.
Energy requirement in MWh for EVs are expected to grow at 16% per annum until 2025. Battery supply is one of the key hurdles to EV growth, especially to meet demand requirements beyond 2019 and 2020. To produce this energy requirement, the battery sector is forecasted to consume 75% to 78% of total cobalt production. In addition to Tesla Motors, Inc.’s US$5.0 billion EV “Gigafactory”, LG Chem has confirmed a plant in Poland and Daimler has commenced a €500 million battery assembly plant. Recently, the following companies have also announced investments in EVs:
The EV market continues to rise in popularity and importance and there are several other EV manufacturers which have announced plans for new vehicle production. It has been forecasted that strong forecast demand from the EV market can potentially double current cobalt demand by 2022. Stationary storage cells utilized to store energy from sources such as wind and solar powered generators and off peak grid charging are also contributing to this significant growth in the markets.