Cobalt Prices Plunge to Record Lows Amid Surging Supply and Shifting Demand
The cobalt market has entered an unprecedented downturn, with prices on the London Metal Exchange (LME) plummeting from a peak of $82,000 per metric ton in April 2022 to $21,550, the lowest since the contract’s inception in 2010.
The current oversupply, largely driven by China’s CMOC Group, contrasts with previous downturns, such as the 2018-2019 slump caused by artisanal mining in the Democratic Republic of Congo (DRC). CMOC, formerly China Molybdenum Corp, more than doubled its cobalt output last year, adding nearly 60,000 tons to a global market of just over 200,000 tons. The company’s two massive copper mines in the DRC—TFM and KFM—are key contributors to this surge, with actual cobalt production hitting 114,165 tons in 2023. Guidance for 2024 suggests output could reach between 100,000 and 120,000 tons.
CMOC’s aggressive production is tied to its copper operations, which yielded 650,000 tons last year. As 98% of global cobalt is produced as a by-product of copper or nickel, higher copper production inevitably results in more cobalt. Indonesia, now the world’s second-largest cobalt producer, has also expanded its output due to booming nickel production.
The cobalt market faces a dual challenge: surging supply and evolving demand. While cobalt was once central to the electric vehicle (EV) revolution, its role is diminishing. The Chinese EV market is shifting towards hybrids and lithium-iron-phosphate batteries, which do not require cobalt. Western automakers still favor nickel-cobalt-manganese chemistries, but growth is slowing. Chinese EV sales rose 36% last year, while North American sales grew by just 9%, and the European market contracted.
Even in Western markets, battery manufacturers are reducing cobalt content due to cost concerns and ethical issues related to artisanal mining in the DRC. Data from Adamas Intelligence indicates that while lithium use in new energy vehicles grew 26% year-on-year in November, cobalt usage remained flat.
Analysts at Macquarie Bank forecast a global cobalt supply surplus through at least 2028. The glut has depressed prices to the point where Western efforts to diversify supply chains are stalling. Despite cobalt’s classification as a critical mineral with military applications, low prices are hindering new developments. Jervois Mining, which received U.S. Department of Defense funding to develop a cobalt mine in Idaho, suspended operations and filed for bankruptcy in January.
The West’s dependency on China for cobalt continues to grow, and unless alternative pricing mechanisms are introduced, the market is unlikely to recover soon.
