The world’s cobalt supplies are stretched thin as demand from electric vehicle automakers has surpassed that of smartphone producers for the first time. When asked about the crunch in cobalt supply, Elon Musk responded that Tesla may have to purchase a cobalt mine to secure its own supplies. The Financial Times’ Neil Hume reports:
Electric vehicles overtook smartphones and personal computers for the first time last year as the main source of demand for cobalt, a rare metal used in lithium-ion batteries.
The automotive industry consumed 59,000 tonnes of cobalt in 2021, or 34 per cent of total demand, as sales of electric and hybrid vehicles doubled, according to a report by the Cobalt Institute.
That outstripped the 26,000 tonnes of metal used in mobile phone manufacturing and 16,000 tonnes in laptops and tablets. Total demand for cobalt was 175,000 tonnes against mined supply of 160,000 tonnes.
The mismatch in those figures highlights one of the biggest challenges facing the automotive industry as it goes electric: securing enough raw material. As more electric vehicles are rolled out, concerns are mounting about potential supply crunches for crucial battery metals from cobalt to lithium and nickel. Demand from the car industry is expected to account for half of the cobalt demand by 2026.
Cobalt is seen as particularly problematic because it is a byproduct of mining copper and nickel, and supply is very concentrated by geography and company.
Almost three-quarters of the world’s mined cobalt supply comes from the Democratic Republic of Congo, where production is dominated by Chinese companies and London-listed Glencore. The Cobalt Institute report shows that the central African country produced 118,000 tonnes of cobalt in 2021 — significantly more than the next largest supplier, Australia, at just 5,600 tonnes.
That has fuelled speculation about whether a big carmaker might acquire a miner. Tesla’s chief executive Elon Musk told an industry conference last week that he was open to the idea.
“It’s not out of the question,” he said at the FT Future of the Car Summit. “We will address whatever limitations are on accelerating the world’s transition to sustainable energy. It’s not that we wish to buy mining companies, but if that’s the only way to accelerate the transition, then we will do that.” Tesla has a goal of producing 20mn electric vehicles annually, up from 1mn last year.
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