Key takeaways from Cobalt Congress 2023
Delegates at the Cobalt Congress conference in Istanbul, Turkey, held May 9-11, discussed expectations and developments in the global cobalt market following a volatile 12 months. Here are four key takeaways
Oversupply and weak demand
Oversupply and weak demand across the supply chain has pressured the cobalt metal price over the past 12 months. The rapid price decline featured heavily in conversation between market participants on what the second half of the year had in store for the market.
“I think the conference was a good sounding board for the market,” a trader said. “It was certainly not great from a selling perspective, but buyers will be pleased to hear further weakness.”
Fastmarkets assessed the price of cobalt standard grade, in-whs Rotterdam at $13.75-15.00 per lb on Wednesday May 17, unchanged from the day previous but down from $14.40-15.00 per lb on Tuesday May 9, the first day of the conference.
“The market was expecting a big economic push from China after Lunar New Year but it never really arrived,” a second trader at the conference said. Other market participants agreed and stated demand in Asia was slower than expected.
Electric vehicle production and sales in China dropped in April, affected by a weaker and cautious consumer sentiment following aggressive price wars in the automotive sector.
Fastmarkets’ research analysts forecast cobalt will reach an oversupply of 4,000 tonnes in 2023, with the surplus increasing to 14,000 tonnes in 2024.
China Molybdenum Co (CMOC) reached consensus with state-owned miner Gécamines on royalties for copper and cobalt mined in at Tenke Fungurume in the Democratic Republic of Congo (DRC). Market participants agreed in April that this would be a key discussion point for conference participants.
“That signals more cobalt on the market than there was six months ago, irrespective of if volumes are pre-committed or facing shipping delays, this is a couple months before the market quietens for summer as well,” commented a third market participant.
Some market participants expected CMOC’s cobalt hydroxide stockpile to put pressure on the market in the coming weeks but conceded this would be dependent on logistical efficiency amid present delays in Africa.
“The logistical hurdles are still there, but [things are] better than a year ago [and] freight availability is also better than 12 months ago. Prices have fallen too,” a fifth market participant said at the Istanbul conference.
“It needs a supply side issue, really, for things to pick up,” a sixth market participant said. “And with the Tenke news, that issue needs to be much larger now, given the [cobalt hydroxide] supplies approaching the market.”
Battery chemistry choice
The future of battery chemistries was a key discussion point during panels at the conference. Nickel cobalt manganese oxide (NCM) looks to remain a popular battery chemistry outside of China amid the growing market share of lithium iron phosphate (LFP) batteries, according to analysts at the conference.
Cobalt containing batteries are preferred for longer range characteristics in electric vehicles (EVs) and increased battery production capacity outside of China over LFP batteries.
“There will always be a risk of [NCM] being replaced by a different chemistry, but we still see cobalt as a key component for batteries. Cobalt is important for safety and stability of the chemistries in the battery,” a panelist at the conference said.
Fastmarkets’ research forecasts the EV industry will account for 47% of the total demand for cobalt by 2030.
However, the cobalt market has seen the effects of the rise in popularity for LFP batteries in China, which has affected demand for NCM batteries in the country. China remained the dominant producer of EV batteries in 2022, according to Fastmarkets analysts.
At Fastmarkets’ Asia Battery Raw Materials conference earlier in May, panelists spoke on the market share of LFP in China which saw installed capacity increase to 68.2% in the first quarter of 2023, from 58.4% for first quarter 2022.
Fastmarkets’ twice weekly cobalt hydroxide payable indicator, min 30% Co, cif China, % payable of Fastmarkets’ standard-grade cobalt price (low-end) was assessed at 51-53% on Wednesday May 12, unchanged from previous assessment but down from 58-61% on January 4.
“A lot of the big [original equipment manufacturers] guys signed forward agreements with cobalt producers last year, that emphasizes cobalt still has a big role to play in future of electric vehicles,” a market participant at the conference said.
Investment needed in cobalt refining capacity
Panelists at the conference discussed one issue that could affect the transition to a zero-emissions market, namely the cobalt refining capacity bottleneck outside of China.
“Refining capacity is the first [aspect] that investment needs to go into, because it’s the quickest de-risked approach to meeting policy targets,” Kaleigh Long, founder and chief executive of Westwin Elements, said in a panel discussion on the global drive for raw materials.
The US has yet to have an operational cobalt refinery, although projects were scheduled to be up and running in the next couple of years. The EU was further forward in that regard, with the EU and Turkey accounting for 9% of global refining capacity, according to Fastmarkets research. Fastmarkets’ research team was due to publish an updated figure later this month.
“First and foremost in the cobalt market, the bottleneck is refining… There is geological supply to create long-life technology… You want fully integrated, robust [supply] chains,” Joe Kaderavek, chief executive officer of Cobalt Blue, said.
Market participants expect investment to be incentivized by grants made available from the US via the Inflation Reduction Act (IRA).
“The IRA has accelerated our expansion plans and sped up how we do business too,” a consumer at the conference said.
This was echoed by another market participant; “The US don’t care too much about the day-to-day prices, they want to integrate supply chains... the wind is in the sails now.”
“It makes a lot of sense for electric vehicle supply chains to be looking at the EU and the US. The policy targets make for healthy demand forecasts, with incentives in place to support market development,” a chemical manufacturer said at the conference.
“Prices have fallen further than we expected in [the second quarter], below our previous quarterly forecast,” Fastmarkets analyst Robert Searle said.
“For now, the Inflation Reduction Act continues to support strong EV growth in the US, and the EU’s response with the Critical Raw Materials Act and legislation to support EV penetration rates will continue to support cobalt demand from the EV sector,” he said. “But the sheer size of the Chinese battery and EV market means that, until we see a recovery in Asia, prices could remain subdued.”
DRC calls for further cooperation between producers and consumers
In a keynote speech at the conference, the DRC minister of mines called for battery raw materials consumer countries to invite the producing countries to discussions.
“We should work with the consumer countries and to manage the energy transition. It is hard to meet the demand from countries like the US, France, Japan and China without consultation,” Antoinette N’Samba Kalambayi, the DRC’s minister of mines, said.
Having already participated in several meetings with the US, Canada, Japan, France and Switzerland, Kalambayi noted that everything is being done outside the producing countries instead of involving the producing countries.
Representatives of battery raw materials consuming countries at the conference also called for this cooperation.
In a panel discussion, Peter Handley, a key representative for the EU Commission, reiterated the call for a “global critical materials club” of producers and consumers to be set up to encourage collaboration.
“You need to have that conversation with both sides of the market to work out what can be done to sustainably ramp up supply and improve [environmental social governance] scores, rather than forcing Western standards onto other countries,” he said.
“We would like to partner with the DRC too. We can’t bring big mining companies because we don’t have many in the EU but we can bring offtakers. We can also develop infrastructure,” Handley added.
“It is important for all stakeholders to sit and discuss in one table,” Paul Mabolia Yenga, a coordinator at DRC’s federal government office of Cellule Technique de Coordination et de Planification Miniere (CTCPM) said in a panel discussion.
The US has made resource allocation a priority, signing a Memorandum of Understanding in December 2022 with the DRC and Zambia to develop a supply chain for the EV sector.
The DRC is the world’s largest producer of cobalt, accounting for 74% of global supply in 2022, according to Fastmarkets research analysis.
Keep updated with the latest news and insights on our cobalt market page.