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Cobalt is a hard, lustrous, silver-grey metal with a high melting point. It is a minor element of the earth’s crust and vital to a wealth of high-technology applications. Besides application as an electrode material in lithium ion batteries, cobalt has many applications including magnetic, wear-resistant and high-strength super alloys (such as those used on gas turbine blades and jet aircraft engines), catalysts, chemicals and coloured dyes.

Cobalt is traded on the London Metal Exchange. It is mined as a mineral concentrate and sold as both a metal and chemical product. Chemicals account for 58% of cobalt output, a market which has risen to dominance over the last decade through the increase in global battery domination.

Presently cobalt is a by-product sourced primarily from copper and nickel mining rendering cobalt output highly dependent on the production of these primary metals.

It is estimated that demand for cobalt will continue to grow year on year with many analysts believing it will soon be in a deficit situation. 55% - 60% of the world cobalt supply is from the politically instable Democratic Republic of Congo which has come under intense scrutiny following reports from Amnesty International that around 20% of this supply was sourced using artisanal mining and child labour. This along with falling copper and nickel prices causing supply to be cut in the DRC, means that this cobalt supply source may no longer be sustainable.

Cobalt consumption by the rechargeable batteries sector represents the largest single source of cobalt demand. The rapid growth in demand is attributed to the increasing popularity of Li-ion batteries in electronic devices (smart phones, tablets, portable PCs, power tools). The developments in new applications such as electric vehicles and home energy storage units show that the real growth in cobalt demand is yet to come.

Cobalt is a critical functional component to a lithium ion battery and makes up an average of 10-15% of the cathode. Cobalt chemicals are used as a key component in three major lithium ion battery chemistries: Lithium cobalt oxide (LCO), lithium nickel manganese cobalt oxide (NMC) and lithium nickel cobalt aluminium oxide (NCA). The latter two are rapidly becoming the technology of choice for the EV sector. Both, projected significant growth in cobalt consumption from the battery sector and the instable supply situation have created an interesting opportunity for new projects with a focus on high grading and primary cobalt resources entering the market.