Home > About Cobalt
TSX.GMC
Cobalt Producers & Cobalt Demand
Cobalt is an element that has many diverse and critical uses. In most applications, substitution for cobalt yields lower product performance. Below are cobalt’s most common usages.
|
2006 Global Cobalt Use(1) |
% of Market |
|
Batteries - Cell phones, computers, hybrid vehicles, portable tools, etc. |
22 |
|
Super Alloys - Turbine blades, mainly jet engines |
22 |
|
Chemicals - Includes pigments and dyes |
27 |
|
Wear Resistant Alloys - Hard facing and cobalt carbide |
11 |
|
Catalysts - Includes Gas-to-Liquid conversions |
11 |
|
Magnets - High performance applications |
7 |
Cobalt in rechargeable batteries is the fastest growing use. Nickel metal hydride and lithium-ion batteries both contain cobalt and are used in hybrid electric vehicles (HEVs), computers, cell phones, portable tools, audio/visual units, and numerous electronic devices. The fastest growing segment of battery applications is for HEVs, which reduce air pollution and fuel consumption by at least 50% compared to conventional vehicles. The HEV “plug-in” option is even more environmentally friendly, and includes an extra cobalt-bearing battery that can be charged from electrical outlets and achieve fuel economies that exceed 100 miles per US gallon. In the US, roughly one-third of all CO2 emissions come from transportation sources.
The Toyota Prius HEV was named 2004 Motor Trend Car of the Year and 2005 European Car of the Year. Toyota estimates sales of one million hybrid vehicles per year by 2012 and plan to offer all Toyota and Lexus models as hybrids. General Motors, Ford, Daimler-Chrysler, Mercedes, and others are attempting to catch up with Toyota’s hybrid success. Nearly all current HEVs use nickel-metal hydride batteries that contain about 22 pounds of nickel and 3 to 5 pounds of cobalt. Lithium-ion batteries containing 5 to 7 pounds of cobalt and little or no nickel are expected to dominate future HEV markets because they charge in minutes rather than hours and offer many other economic and technical advantages. Global production of HEV’s in 2007 was about 400,000-500,000 units, and is estimated to increase to 8 million units by 2015(2), thereby increasing annual cobalt demand by nearly 22,000 tonnes/year. In 2006, the world produced 69 million conventional cars and light trucks, and is expected to produce over 80 million units by 2015.
Cobalt Supply and Demand
The cobalt market is dynamic but small in comparison with other base metals. Consumers purchase cobalt through negotiated agreements, bids, and open markets from producers, traders and to a lesser degree, government stockpiles and private inventories. Approximately 62% of the world’s 2006 cobalt produced was a byproduct of nickel from sulfide and laterite deposits. An additional 35% was produced as a byproduct of copper operations, mainly in the Democratic Republic of the Congo (DRC) and Zambia. The remaining 3% of cobalt production came from primary producers.
Several new projects are deemed to be sufficiently advanced and financed to produce significant quantities of cobalt in 2009-10 (mainly as a byproduct), including those listed below. However, until that time cobalt demand is expected to significantly exceed production due to limited new production and the absence of stockpiles. Additional projects may also come on stream in the intermediate term, however political and logistical issues in the DRC may endanger the viability of some of the larger projects.
|
Major New Projects |
Start Up Year |
|
Annual Prod. |
|
Katanga Mining |
2010 |
DRC |
10,000 |
|
Camec |
2009 |
DRC |
10,000 |
|
Tenke Fungurume |
2010 |
DRC |
8,000 |
|
Kolwezi Tailings |
2009 |
DRC |
5,000 |
|
Goro |
2009 |
New Caledonia |
4,500 |
|
Nkamouna |
2010 |
Cameroon |
4,100 |
|
Niquel de Vermelho |
2010 |
Brazil |
2,800 |
| El Boleo | 2010 | Mexico | 1,500 |
|
Caldag |
2009 |
Turkey |
1,200 |
|
Total |
n/a |
|
47,100 |
Preliminary estimates for 2008 world demand are 64,000 tonnes, or an 8,000-tonne increase from 2006 demand. On the supply side, the CDI estimates that 2007 cobalt production was unchanged from that of 2006, at nearly 54,000 tonnes, and is unlikely to materially improve in 2008.
Cobalt consumption in 1995 was only 24,000 tonnes, but grew to 57-58,000 tonnes in 2007, or a compound annual growth rate (CAGR) of 7.1% for the 12-year period. In the chart below, actual world supply and demand data from external sources are used, whereas the projections from 2007 through 2015 are based on an 8% CAGR. Production from existing projects after 2006 are expected to be reduced by 1,000 tonnes/year, mainly due to declining production from artisanal miners, smugglers in the DRC (approx. 8,000 tpy), and depletion of reserves at existing operations. In summary, the chart strongly suggests that the market will accommodate production from many new and expansion projects.
|
|
|
Source: Actual supply and demand by USGS, The CDI and other independent research groups. Projections after 2006 were developed by Geovic. |
Roskill Consulting, an international group that researches mineral industry information, estimates growth in demand by 2011 in a most likely case to be 72,500 tonnes(3). However, this forecast could be considerably understated given the exponential growth in batteries for hybrid vehicles and new demand from emerging markets such as China and India.
Global cobalt consumption by country and the increase for the four-year period ending 2006 is shown below(4).
Tonnes Cobalt
Country |
2002 |
2006e |
% Change |
|
Europe |
11,100 |
13,730 |
24 |
|
Japan |
7,250 |
12,300 |
70 |
|
China |
4,300 |
11,000 |
156 |
|
USA |
9,250 |
11,450 |
24 |
|
Other |
5,200 |
7,520 |
45 |
|
Total |
37,100 |
56,000 |
51 |
The table below shows approximate production of refined cobalt and reserves and resources by country.
Refined Cobalt Production in 2006 & Reserves(4).
|
Country |
Tonnes Refined |
Tonnes x 1000 |
Tonnes x 1000 |
|
Australia |
3,996 |
1,400 |
1,700 |
|
Belgium |
2,840 |
0 |
0 |
|
Brazil |
902 |
29 |
40 |
|
Canada |
5,023 |
120 |
350 |
|
China |
12,700 |
72 |
470 |
|
Congo - Dem. Rep. |
550 |
3,400 |
4,700 |
|
Cuba |
0 |
1,000 |
1,800 |
|
Finland |
8,580 |
0 |
0 |
|
India |
1,184 |
0 |
0 |
|
Japan |
920 |
0 |
0 |
|
Morocco |
1,405 |
20 |
n/a |
|
New Caledonia |
1,100 |
230 |
860 |
|
Norway |
4,927 |
0 |
0 |
|
Russia |
4,759 |
250 |
350 |
|
United States |
0 |
n/a |
860 |
|
Zambia |
4,665 |
270 |
680 |
|
Other |
1,482 |
130 |
2,000 |
|
Total |
53,933 |
7,000 |
13,000 |
|
*includes reserves plus measured and indicated resources |
|||
There are no published statistics on world use of cobalt scrap, but the USGS estimates 2006 U.S. scrap consumption was about 25% of reported US consumption.
Prices
Cobalt prices fluctuate significantly in response to world events, such as the September 11, 2001 terrorist attacks that reduced orders for jet engines, labor and political unrest, and changes to supply and demand. Although there is no exchange market for cobalt like the LME or COMEX, prices are set for cobalt metal through sources such as Platt’s Metal Week, Metal Bulletin, Metal Pages, and BHP Billiton’s Cobalt Open Sales Systems. Prices of cobalt compounds such as oxides, hydroxides, and acetates are less transparent and are limited to published producer’s prices that are often left unchanged for long periods.
The 20-year and 3-year average prices per pound of 99.8% cathode cobalt as of October 2007 were $16.00 and $20.08, respectively.
Footnotes
Much of the project and cobalt market data in this report were obtained from the four sources below:
(1)The Cobalt Development Institute, www.thecdi.com.
(2) Credit Suisse Metals & Mining report, 04-02
(3) The Economics of Cobalt, 11th Ed., 2007 by Roskill Information Services Ltd., www.roskill.co.uk
(4) USGS website, http://minerals.usgs.gov/minerals/pubs/ commodity/cobalt/.
References
Cobalt market data, publications and related services may also be obtained from other
sources, including:
• SFP Research - www.sfp-metals.co.uk
• The CRU Group - www.crugroup.com, or www.crustrategies.com
•GFMS Metals Consulting Ltd., www.gfms-metalsconsulting.com
• World Bureau of Metal Statistics, www.world-bureau.com
•BHP Billiton, www.cobalt.bhpbilliton.com
Disclaimer
This document contains certain forward-looking statements and projections estimated by Geovic personnel regarding future production, metals markets, competition, capital spending, earnings, cash-flow, commodity prices, resources and other considerations. The statements are based upon Geovic’s current expectations and beliefs, and are subject to a number of known and unknown risks and uncertainties that could cause actual results to differ materially from those presented herein. Any use of this document is at the sole risk of any party that so relies.