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Modern Day Vibranium: Congo’s Cobalt Demand Surges

Modern Day Vibranium: Congo’s Cobalt Demand Surges

By CultureBanx Team

  • Democratic Republic of Congo accounted for around 64% of global mined cobalt production last year

  • Cobalt use in batteries is going to jump to more than 320,000 tons by 2030

The Democratic Republic of Congo has refocused attention on the human cost of producing cobalt, a key input into electric vehicle (EV) batteries as demand rises. Prices have fluctuated due to the high demand for the metal from major tech companies and auto makers. Could the future stability of sustainable supply become the Achilles heel for these sectors?

Why This Matters: Cobalt remains the bedrock of passenger vehicle batteries, albeit with varying composition ratios. Companies like Toyota (7203.T +2.09%) and Panasonic (6752.T +2.78%) will have to fend off Apple (AAPL -1.491%) the world’s largest end user of cobalt, primarily for its iPhone production. Smartphones only use about eight grams of refined cobalt whereas a battery for an electric car requires over 1,000 times more.

They will of course be battling Tesla (TSLA +1.83%), the EV leader in addition to other automakers in the space for cobalt. Elon Musk told CultureBanx last summer that, "We use less than 3% cobalt in our batteries & will use none in next [generation]." 

The Congolese government has increased its tax on Cobalt exports by 50%

Democratic Republic of Congo accounted for around 64% of global mined cobalt production last year, according to the United States Geological Survey. Additionally, prices of the precious metal traded on the London Metal Exchange surged to a March 2018 peak of $95,250 per ton from around $33,000 at the start of 2016, now trading at $27,000. Also, Darton Commodities predicts cobalt use in batteries is going to jump from 50,000 tons in 2016 to more than 320,000 tons by the year 2030. 

What makes cobalt so valuable to EVs? This is where it gets a bit technical: the cathodes in lithium-ion batteries typically used in EVs are made of metal oxides that contain a combination of cobalt and other elements. Cobalt allows the cathodes to focus immense power in a confined space. Simply put, without the element's energy density, batteries without cobalt tend to perform worse.

Situational Awareness: The Congolese government has increased its tax on Cobalt exports by 50% and is considering labeling the mineral a strategic resource. This would increase the royalty for Cobalt from 2% to 10%. It's important to note that child labor issues have been reported in the mining of cobalt and it’s hard to track the metal's origination once it has reached the end of the supply chain. 

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