Nick French: We Are Approaching The Cobalt Cliff
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Nick has been following the metals for over twenty-five years He feels the coming period will be a fascinating time for cobalt. Cobalt is a by-product of copper and nickel mining, and as a result, the supply can’t be easily adjusted. Also, 65% of supply comes from the unpredictable and logistically tricky Congo region.
If the cobalt price reaches $100 a pound, it will still not justify the creation of a nickel or copper mine to produce cobalt since the cost would be upwards of six billion dollars. He sees nothing in the next five years that will put a cap on the price. Current demand is near 100,000 tons per year, and there are very few places where cobalt use can be cut. It’s used in alloys for products like jet engines and medical devices, and this usage demand is still increasing by 6% per annum.
In the next five to ten years there are no alternatives to cobalt use in lithium-ion batteries. The only thing that can change is the ratios of the battery metals used which may halve the amount required per battery. However, battery demand itself is expected to rise ten-fold as electric vehicle production grows.
There are always large lead times between cap-ex and actual mine production. Not much additional production is coming online in the next five years. He discusses two projects both in the Congo that may produce 40,000 tons per year. Everyone agrees that the shortage by 2025 will be 170,000 to 200,000 tons per year.
There are very few pure cobalt plays. Cobalt 27 is one such play as they have 2100 tons warehoused in the United States.