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Cobalt
The price of cobalt has seen two historic spikes in the last decade as supply has struggled to meet demand, driven by electric batteries.
Cobalt is no longer the breakout metal it was in 2017 or 2021, with improved supply and changing electric battery chemistries impacting demand, but that does not mean that investors should count cobalt out just yet.
The Democratic Republic of Congo still dominates 64% of global supply, presenting significant geopolitical and supply chain risks, and soaring electric vehicle sales are expected to offset any efficiencies in electric battery chemistries.
Stay ahead of the market with our regular investment insights into cobalt:
What is cobalt?
Cobalt (Co), atomic number 27, is a silvery-blue metal known for its strength, ferromagnetism, and resistance to oxidation. With a melting point of 1495°C, it’s a durable transition metal rarely found in pure form, usually occurring alongside nickel, copper, and iron.
The name “cobalt” comes from the German word “kobalt” or “goblin,” a nod to medieval miners who blamed the metal for mysterious illnesses—unaware that the arsenic in cobalt ores was poisoning them.
Today, cobalt is essential to modern industry, playing a key role in batteries, aerospace alloys, and military technology, securing its status as a strategic metal.
Why cobalt matters: strategic applications
Defense and Aerospace
Cobalt’s exceptional properties make it indispensable for defense applications:
- Superalloys: cobalt-based superalloys withstand extreme temperatures and mechanical stress, making them crucial for aircraft engines, gas turbines, and rocket components
- Magnetic materials: cobalt alloys produce permanent magnets vital for radar systems, guidance technology, and communications equipment
- Radiation shielding: cobalt-60, a radioactive isotope, serves in radiation therapy equipment and as a radiation source for industrial radiography
AI and data centers
The digital transformation driving modern economies relies heavily on cobalt:
- Server reliability: cobalt alloys in hard disk drives improve performance and reliability in data centers powering cloud computing and AI operations
- Cooling systems: advanced cooling systems in high-performance computing facilities utilize cobalt-containing components to manage heat dissipation
- Semiconductor manufacturing: cobalt is increasingly used in advanced semiconductor manufacturing processes for integrated circuits
A typical data center requires significant quantities of cobalt across its infrastructure, with demand projected to grow 19-22% annually (McKinsey & Company) as AI applications expand.
Energy Transition
Cobalt plays a pivotal role in decarbonization efforts:
- Lithium-ion batteries: the most common lithium-ion battery cathodes contain significant cobalt, providing energy density and thermal stability crucial for electric vehicles
- Grid storage: large-scale energy storage systems typically use cobalt-containing batteries to stabilize renewable energy output
- Wind turbines: permanent magnets in wind turbine generators often contain cobalt to enhance performance and efficiency
A standard electric vehicle battery (60kWh) contains approximately 4-12kg of cobalt, though manufacturers are working to reduce this through alternative cathode chemistries. For example, high-nickel NCA batteries (Tesla Model Y) use 4.8kg, while NMC811 (BYD Seal) requires 7.2kg (according to the 2024 IEA EV Battery Report).
Other critical applications
Beyond these major sectors, cobalt serves essential functions in:
- Healthcare: cobalt compounds are used in medical imaging, radiation therapy, and prosthetic alloys
- Industrial catalysts: cobalt catalysts enable numerous chemical processes, including petroleum refining and synthetic fuel production
- Tool manufacturing: cobalt improves the hardness and wear resistance of cutting tools used across manufacturing sectors
Supply and demand dynamics
Global cobalt demand reached approximately 175,000 metric tons in 2023, with projections suggesting this could double by 2030. Key demand drivers include:
Battery manufacturing
- 54% of global cobalt consumption in 2024 (according to Benchmark Mineral Intelligence); NMC (nickel-manganese-cobalt) batteries now represent 58% of EV market
- EV battery production growing at 25-30% annually
- Consumer electronics continuing steady demand growth
- Stationary storage market expanding at 35% annually
- Accounts for 20% of cobalt consumption
- Aerospace industry recovering post-pandemic with 4-6% annual growth
- Defense spending increases driving additional demand
- Industrial gas turbine market expanding at 3-5% annually
Superalloys Catalysts and chemical applications
- Represents 10% of consumption
- Petroleum refining maintaining steady demand
- Fischer-Tropsch process for synthetic fuels growing in importance
- Chemical manufacturing requiring cobalt catalysts for green chemistry initiatives
Emerging applications
- Quantum computing technologies requiring specialized cobalt compounds
- Advanced robotics utilizing cobalt-containing components
- Space exploration driving demand for high-performance materials
- Hydrogen production technologies incorporating cobalt catalysts
Supply Landscape
Production Concentration
Global cobalt production reached approximately 190,000 metric tons in 2023, with the Democratic Republic of Congo (DRC) dominating supply:
| Country | Production (Metric Tons) | % of Global Production |
|---|---|---|
| DRC | 125,000 | 64% |
| Russia | 9,000 | 5% |
| Australia | 6,000 | 3% |
| Philippines | 5,300 | 3% |
| Cuba | 3,800 | 2% |
| Canada | 3,300 | 2% |
| Other | 37,600 | 19% |
This concentration creates significant supply chain vulnerability, with political instability in the DRC posing ongoing risks to global supplies.
Global Reserves
According to the US Geological Society, in 2024, estimated global cobalt reserves stand at 8.9 million tons, with DRC at 4.5M tons (50%), Australia 1.3M tons (15%), and Cuba 0.9M tons (10%)
Lithium iron phosphate (LFP) adoption lowered EVs’ cobalt share to 54% in 2024 (Benchmark Mineral Intelligence).
Our industry video on how to invest in cobalt:
Mining characteristics
Cobalt production presents several unique challenges:
- By-product status: 98% of cobalt is produced as a by-product of copper (60%) and nickel (38%) mining, creating supply inelasticity
- Artisanal mining: 15-20% of DRC production comes from artisanal miners, raising ethical concerns and supply variability
- Processing concentration: China controls 72% of global cobalt refining capacity, adding geopolitical complexity
- ESG considerations: serious human rights and environmental challenges in cobalt mining have prompted industry-wide initiatives to improve practices
Major producers and market control
Corporate landscape
The cobalt mining sector features significant concentration among major producers:
Glencore (Switzerland)
- World’s largest cobalt producer
- Operates Mutanda and Katanga mines in DRC
- Produced approximately 29,800 metric tons in 2023 (Q4 2023 Earnings Report)
- Vertically integrated with refining capabilities
- Market share: 18-20%
CMOC Group (China)
- Operates Tenke Fungurume Mine in DRC
- Significant expansion underway at Kisanfu project
- Produced approximately 20,000 metric tons in 2023
- Increasing Chinese control over cobalt supply chains
- Market share: 10-12%
Eurasian Resources Group (Luxembourg)
- Operates Metalkol RTR in DRC
- Focused on reprocessing tailings to reduce environmental impact
- Produced approximately 15,000 metric tons in 2023
- Market share: 8-9%
Other Key Producers
- Sherritt International (Canada): Cuban operations
- Vale (Brazil): Global nickel operations with cobalt by-product
- Jinchuan Group (China): Integrated producer with international assets
- Umicore (Belgium): Major refiner with recycling focus
- Chemaf (DRC): Growing domestic producer
Refining and Processing
While mining is concentrated in the DRC, refining capacity shows a different geographic distribution:
- China: processed 74% of global cobalt in 2024 (according to Adamas Intelligence)
- Finland: 10% (dominated by Umicore and Freeport Cobalt)
- Japan: 5%
- Canada: 4%
- Belgium: 3%
- Others: 6%
This refining bottleneck creates additional supply vulnerabilities and has prompted calls for diversification of processing capacity.
Historical market moments
The 1978 Shaba Crisis
When rebels invaded the Shaba Province (now Katanga) in the DRC, cobalt prices surged from $6/lb to over $50/lb virtually overnight. The crisis:
- Cut off 40% of global cobalt supply
- Created panic buying among aerospace and defense manufacturers
- Prompted the US to establish a strategic stockpile. In 2024, the National Defense Stockpile increased cobalt stock to 2,450 tons (DLA Strategic Materials Report)
- Led to the first major push for cobalt substitution in manufacturing
The 2008 Chinese stockpiling
Following the 2008 financial crisis, China began aggressively stockpiling cobalt:
- Prices doubled from $15/lb to over $30/lb in six months
- Chinese companies initiated acquisition of DRC assets
- Western manufacturers were caught off-guard by supply constraints
- New exploration projects were rapidly initiated but struggled to secure financing
The 2017-2018 price surge
Anticipation of the electric vehicle revolution drove a spectacular price surge:
- Cobalt prices quadrupled from $10/lb to over $40/lb
- Massive investment flowed into exploration and development
- Multiple junior mining companies entered the sector
- Automakers began pursuing cathode chemistries with reduced cobalt content
The 2019-2020 price collapse
The bubble burst dramatically as market realities set in:
- Prices fell to around $15/lb by mid-2019
- Glencore suspended operations at its massive Mutanda mine
- Numerous development projects were shelved
- Industry focus shifted to ensuring ethical supply chains
The COVID-19 impact and recovery
The pandemic created significant market disruption:
- Initial demand destruction as manufacturing slowed globally
- Supply chain bottlenecks as shipping and logistics were constrained
- Strong recovery driven by stimulus measures boosting EV adoption
- Price volatility reflecting uncertain economic conditions
The 2022-2023 market correction
Recent market dynamics have shown significant volatility:
- Price declines from over $30/lb to under $20/lb
- Increased production from expanded DRC operations
- Technology shifts toward lower-cobalt battery chemistries
- Growing recycling capacity beginning to impact primary demand
The road ahead: trends shaping cobalt’s future
Supply chain restructuring
The cobalt market is undergoing fundamental transformation:
- Responsible sourcing initiatives: the Responsible Minerals Initiative, Fair Cobalt Alliance, and Cobalt Industry Responsible Assessment Framework are establishing new industry standards
- Geographic diversification: projects in Australia, Canada, and the United States are receiving premium valuations despite lower grades
- Vertical integration: battery manufacturers and automakers acquiring direct stakes in cobalt production to secure supply
- Blockchain traceability: implementation of distributed ledger technologies to verify ethical sourcing
Technological Evolution
Innovation continues to reshape cobalt’s role:
- Reduced cobalt intensity: NMC 811 (8 parts nickel, 1 each manganese/cobalt) cuts cobalt by 64% vs. NMC 111 (Fraunhofer Institute, 2024)
- Solid-State batteries: next-generation battery technologies potentially requiring different material inputs
- Recycling advancements: hydrometallurgical processes achieving up to 95% cobalt recovery from battery waste
- Substitution research: ongoing efforts to replace cobalt in catalyst applications and magnetic materials
Regulatory Environment
Policy developments significantly impact the cobalt landscape:
- Critical Minerals designations: US, EU, Japan, and others classifying cobalt as strategically essential
- Supply chain due diligence: EU Battery Regulation and US SEC requirements mandating supply chain transparency
- Strategic stockpiling: various governments rebuilding strategic reserves
- Mining Code revisions: DRC and other producing nations reviewing taxation and ownership requirements
Cobalt stands at the intersection of several transformative trends shaping the 21st-century economy. Its unique properties make it indispensable for technologies driving both the energy transition and digital transformation, while its concentrated supply creates both investment opportunities and significant risks.
For investors, cobalt represents a complex but potentially rewarding sector requiring specialized knowledge. Supply constraints, technological evolution, and regulatory developments all contribute to a market characterized by structural volatility and rapid change.
As global economies navigate the dual imperatives of decarbonization and digitalization, cobalt’s strategic importance will likely increase further, cementing its status as a critical material for modern industrial society. The companies and countries controlling cobalt resources and refining capacity will continue to hold significant economic and geopolitical advantages in coming decades.
The most successful investors in this space will balance exposure to cobalt’s growth potential with careful attention to technological disruption risks, ethical sourcing requirements, and the ongoing geopolitical competition for control of critical mineral supply cha
