The Democratic Republic of Congo (DRC) is ground zero for the world’s cobalt supply. It’s responsible for an astounding 66 percent of the world’s cobalt production. This strategic mineral is an indispensable component in various sectors. This is particularly important for the domestic production of EV batteries and renewable energy storage batteries. Among other problems, cobalt mining, especially in the DRC, has been linked to child labor and human rights abuses. In response, researchers and manufacturers are working diligently to find replacements. Now, as demand for cobalt is expected to skyrocket over the next decade and beyond, the cobalt supply chain landscape is being significantly altered.
That’s why the Australian government is projecting a record increase in cobalt demand. It may be more than 20 times the amount counted in 2020. Demand is through the roof! This increase is undoubtedly driven by the booming industries of electric vehicles and energy storage devices. The production landscape is as messy as it gets. Indeed, 74 percent of cobalt refining occurs in China, driving key issues around supply chain resilience and geopolitical risk to the fore.
The Environmental and Social Impacts of Cobalt Mining
Manufacturing
Cobalt mining, especially when considering the Democratic Republic of Congo (DRC), has long posed significant issues with environmental sustainability and human rights abuses. Advocacy reports have pointed out the rippling harms to communities along transit lines. They expose abuses such as child labor and unsafe working conditions in artisanal mining operations. These challenges have led to a burgeoning movement among automakers and researchers alike to completely eliminate cobalt from their supply chains.
In answer to these challenges, several technological innovations are being introduced to reduce the amount of cobalt in batteries. Researchers are continuing to research new battery chemistries that reduce or replace cobalt altogether. If this trend continues, it could dramatically reshape the landscape of U.S. battery production. As manufacturers adjust to using these new materials, we can expect to see a decrease of demand for cobalt.
Even with these strides to minimize cobalt for all applications, its value in key use cases is unquestionable. Cobalt will still be key. Cobalt will still be crucial—in super-alloys in military and aerospace applications. Its unique properties are critical to dramatically increased strength and heat resistance, making it a vital resource. Therefore, even as the demand for cobalt in battery applications decreases, cobalt will remain important in specialized industries.
The Global Supply Chain and Future Outlook
Given that the DRC produces over 70% of the world’s cobalt, its overwhelming production capacity leads to worries about supply chain threats. The concentration of refining activities in China really adds a wrinkle to this. Disruptions in the DRC’s sizable mining operations may occur due to political destabilization or from environmental regulations. These disruptions do much more than just temporarily impact global supply.
Australia is another major player in this picture, with the world’s fourth-largest deposits of cobalt. Glencore’s Murrin Murrin nickel-cobalt mine in Western Australia shines as a top producer. Its operations are very important for global cobalt production. As countries try to get a handle on their supply chain security, Australia’s backyard will start looking pretty good.
Given the expected increase in demand, Australia can be an important part of meeting the world’s need for cobalt and supplying growing international markets. It needs to balance that commitment with the environmental and social obligations surrounding an operation’s life cycle. Australia is trying to make itself into an important supplier of critical minerals. How we strike the balance between economic growth and sustainable practices will be key in accomplishing this daunting goal.
Navigating a Changing Market
Industries are reacting quickly to inevitable technological advancement and market needs. We need to continue to track and understand how these changes will impact global cobalt dynamics. The International Energy Agency projects that cobalt’s role in battery storage could be reduced to “negligible levels” by 2050. This forecast represents the beginning of a major revolution in energy storage technologies, one that can fundamentally alter the trajectory of cobalt demand.
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