Fortune Minerals : Cobalt News

The Economist - September 11, 2023

With ingenuity, a 6.5bn-tonne problem may be dodged ...

Everyone wants more metals. In recent months Britain has inked a deal with Zambia, Japan has sealed one with Namibia and the eu has shaken hands with Chile. The bloc's negotiators also started talks with the Democratic Republic of Congo; America's, meanwhile, visited Mongolia. This scattershot campaign, which is also targeting the Philippines and Saudi Arabia, has a single aim: obtaining the minerals required for rapid decarbonisation…By 2030 copper and nickel demand could rise by 50-70%, cobalt and neodymium by 150%, and graphite and lithium six- to seven-fold. All told, a carbon-neutral world in 2050 will require 35m tonnes of green metals a year…Hence why analysts and policymakers worry about an almighty supply crunch towards the end of the decade. The etc expects shortages of market-breaking magnitudes by 2030: some 10-15% for copper and nickel, and 30-45% for other battery metals. When dwindling stocks cause prices to rise, producers will crank up output and customers use scarce materials more efficiently or turn to cheaper alternatives. What demand remains unmet after this will be destroyed…These will be hard problems to overcome. Yet we find that three levers may lower the pressure without wrecking the transition. First, producers may extract more supply from existing sources, which can be done straight away but will produce limited quantities of metal. Second, firms may open new mines, which could solve the problem entirely but will take time. The limitations of these two levers make a third the most important of all, at least over the course of the next decade: finding ways to circumvent green bottlenecks…Quick wins could come from reusing more material…More could come from restarting idle mines. There are not many of them: a post-covid surge in demand has already reduced slack. Even if prices double, cost curves for copper and nickel indicate that just a few mines would reopen…The greatest hope lies in technologies that squeeze supply from tricky deposits…Yet these new techniques are uncertain, and in some cases come with drawbacks such as pollution. The resulting supply cannot be taken for granted. Starting new mines, the second lever, would bring larger gains, even if slowly. McKinsey, a consultancy, calculates that if the 382 projects in cobalt, copper, lithium and nickel that have at least commenced a pre-feasibility study were to be completed by 2030, it would keep markets just about balanced…To open on time, they will have to overcome a number of difficulties…The first is a shortage of money. McKinsey estimates that to fill supply gaps predicted by 2030 annual capital expenditure in mining has to double to $300bn..Investment by big miners is rising, but not fast enough. This will take time to make a difference, however, since digging new mines takes ages…All this means new supply can only be a solution in the long run, perhaps after a spell of high prices. Thus the lion's share of adjustment in the next decade will come down to demand-our third lever…Auto- and battery-makers are a type of buyer the metals market has never seen before. Fiercely innovative, price-sensitive and risk-averse, such firms work around problems at the first sign of a squeeze in supply. They have already achieved a lot through "thrifting" …More can be achieved through substitution. Nickel-manganese-cobalt chemistries that contain as much cobalt as nickel, known as nmc 111, are being phased out in favour of nmc 721 and 811, which contain more nickel but little cobalt…By the late 2030s there will probably be enough new mines and recycling for the transition to proceed as planned. The question is how much disturbance there will be in the interim. Things will be tight. Since supply will be concentrated in a few countries, local unrest, geopolitical conflict or even bad weather could hit markets…