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The exponential growth in demand for cobalt is putting pressure on manufacturers to increase supplies to fill the growing supply gap, as electric vehicle (EV) penetration rates in car production increase by more than 50% by 2030.
According to some studies, there are three ways to close the supply gap: production increases at miners and refiners; improved processing technology; and recycling.
Increasing demand for battery metals to support a sustained expansion of the global battery electric vehicle (BEV) fleet over the next two to three decades will require a commensurate increase in the supply of battery metals. The primary scale expansion required to meet BEV growth will be challenging.
As an alternative source of supply, recycling is therefore likely to become a more significant contributor to the supply of battery metals as batteries and vehicles begin to reach the end of their useful life in increasing numbers towards the end of the decade and a circular economy is established.
Mine expansions are already taking place. In the Democratic Republic of Congo, Jinchuan Group International is developing the 10,000-tonne Musonoi project, which is expected to start up by 2024.
China Molybdenum is working on two projects, expanding Tenke Fungurume by 17,000 tonnes from 15,000 tonnes. At the same time, the company is also proceeding with the undeveloped Kisanfu site, a project it initially acquired from Freeport McMoRan.
Reflecting concerns over the supply of raw materials for batteries, Chinese battery maker CATL took a 23.75% stake in Kisanfu four months ago.
Glencore is also restarting its 25,000-tonne Mutanda mine, currently the largest site globally. Although Indonesia’s HPAL projects are expected to supply more cobalt units in the coming years, ultimately, supply growth starts to decline from 2024. This raises the risk that cobalt shortages will become an obstacle to EV battery production.
In addition to investing in new operations, miners would also need to address processing technology. Cobalt recovery rates have traditionally been relatively low, as the primary focus was on copper mining, which opens up two opportunities: production increases by increasing recovery rates and the withdrawal of scrap and slag.
Meanwhile, recycling, especially of EV batteries, is still in its infancy. Nevertheless, carmakers are placing greater emphasis on secondary material, with Volkswagen seeking to recycle around 97% of all raw materials in battery packs, up from 53% at present.
Some obstacles need to be overcome to achieve these recycling targets, including inefficient collection infrastructure and lack of consistent supply; technological challenges and safety issues; inefficiencies and lack of profitability of recycling operations; and low demand for “used” products.
All of these issues seem surmountable, with Sumitomo recently highlighting that the performance of batteries using their recycled material was “equivalent to that of batteries produced using existing raw materials derived from natural resources.
