## Cobalt Market Report: EVs become the major driving force for cobalt demand growth in 2021

##### 18 May 2022

The Cobalt Institute’s Cobalt Market Report 2021, prepared by CRU, confirms the role of cobalt as one the key commodities of the green future, due to the rapid growth of the lithium-ion battery market and a strong global uptake of electric vehicles.

In 2021, the cobalt market showed unprecedented demand growth of 22% year-on-year (y/y) to 175 kt. Demand rose by 32 kt in 2021 alone compared to 51 kt in the 5 years from 2015-20. Growth was led by lithium-ion battery applications, accounting for 63% of annual demand and 85% of y/y growth.

In 2021, cobalt demand from electric vehicles overtook other battery applications for the first time to become the largest end use sector at 34% of demand. It is expected to account for half of the cobalt demand by 2026.

In 2021, cobalt-containing battery chemistries accounted for three quarters (74%) of the global electric vehicles battery market.

Supply also returned to growth in 2021, with mine supply rising 12% y/y to 160 kt, after falling in 2020.

The Democratic Republic of the Congo remained the largest source of cobalt supply, accounting for 74% of the global mine supply and 87% (15 kt) of annual growth.Output from the artisanal and small scale mining (ASM) sector is estimated to have increased to 14.5 kt in 2021, 12% of the DRC’s total supply.

Primary refined supply increased 14% y/y to 144 kt. China remained the largest refiner of cobalt globally (72% of total primary production). Indonesia is the largest growth market for refined cobalt production after China, and is expected to provide a quarter of total refined cobalt growth in the medium term.

European metal prices doubled through the year from $16/lb in January to$32/lb by the end of the year. Due to relative market weakness, European prices averaged $2.5 below Chinese metal in 2021, with the discount persisting since mid-2020. Cobalt sulfate prices also maintained a premium over metal, averaging$3.6/lb, due to very strong chemical demand growth from the lithium-ion battery sector.

Cobalt demand is expected to continue rising rapidly as the EV transition gains pace. Demand is forecast to approach 320 kt in the next 5 years from 175 kt in 2021; 70% of growth will come from the EV sector.

Supply will keep pace with demand in the short term, however supply chain bottlenecks remain a key risk. Freight routes were anticipated to begin to normalize from the second half of 2022, but this will likely be delayed due to impacts from the war in Ukraine and Covid-19 lockdowns in China.

From 2024, the market is forecast to shift back into a deficit as supply growth fails to keep pace with demand. Prices will remain elevated to incentivize further investment and prevent wide deficits developing.

Securing access to raw materials is crucial if the world is to achieve the sustainable and just transition to a greener future. Cobalt’s role in batteries and recycling makes it one of the critical materials of a climate-neutral future.

—David Brocas, Head Cobalt Trader at Glencore and Chairman of the Cobalt Institute’s Executive Committee