CHARTS: The coming critical minerals trade war is BRICS short of a load
"While a large number of countries around the world continue to talk about securing raw material supply, China is actually doing something about it."
While demand for both lithium and cobalt is expected to soar due to electric vehicle adoption, the supply picture for both commodities is quite different.
Unlike lithium, cobalt supply is mostly centered in the Democratic Republic of the Congo which hobbles supply due to “. . .a lack of transparency in the value chain and DRC country risk”, says McKinsey in a newly published report comparing the two metals.
“More than 95 percent of the world’s lithium supply occurs as a primary product in the form of brines or hard-rock ores, with a global production footprint including Australia, China, and Latin America. Conversely, less than 10 percent of cobalt supply occurs as a primary product, with the remainder produced as a by-product of primarily copper and nickel mines and more than 65 percent of global production concentrated in the Democratic Republic of the Congo (DRC),” writes the reports authors.
McKinsey warns both suppliers and buyers in the cobalt space to have a sound understanding of future supply and demand dynamics and pursue policies that are “long-term greedy” by creating markets that have long-term stability that will help keep the market intact.
Instead of looking for short-term profits, miners need to collaborate with battery suppliers, automakers, and financial players to create a larger market for their materials. This might include partnering with battery manufacturers to shape existing technologies to ensure a stable, cost-competitive supply of necessary materials to customers; working with financial players to access cost-competitive, long-term funding to ensure the timely development of new capacity; and facilitating the development of a liquid contract market to help users and producers hedge out price risk.
McKinsey warns buyers need to look beyond substitution and create maximum optionality.
Financial players will have a role in helping increase marketing liquidity and develop future and derivative products.
Creative Commons image courtesy of Paul Reynolds
2 Comments
Barney Biggs
What is this guy talking about. Sounds a lot like bafflegab. There is not one pure cobalt play in the US and
e-cobalt is the nearest to production and that might be a year off. The Chinese are wrapping up as much supply as they can get and the battery makers are scrambling for any supply they can get. The Chinese have 5 maga factories and have stated they will bury Tesla with their batteries and likely to do that if they can corner the market in cobalt. There are several research outfit working on alternatives to cobalt but it will probably be several years before they have developed sufficiently to compete but still. Cobalt producers should grab as much of the market as they can while they can.
BobsYourUncle
Barney Biggs… Hello? Iron Creek in Idaho?