Why Cobalt Is A “Choke Point” For E-Car Makers

Trent Mell, CEO of First Cobalt, says there is ‘no issue’ with cobalt’s availability as a resource

With the steady growth in demand for electric car vehicles, manufacturers heavily rely on metals such as lithium and cobalt. The latter has been dubbed as the ‘Achilles heel’ of electric car makers due to its scarcity. Electric vehicles rely on lithium-ion batteries, which mostly require cobalt and graphite to perform efficiently in storing and discharging electricity.

However, Trent Mell, CEO of First Cobalt, one of the most influential cobalt exploration companies in North America, insists there is no issue in cobalt’s availability as a resource.

“The issue is the discovery stage,” says Mell, who established the company to meet growing appetite in the market for cobalt. “The minors here are way behind at what I term as a ‘revolution in mobility’. There’s a real need because I believe we are getting close to austerity…”

Trent Mell

He describes cobalt as the “choke point” of the electric vehicle market supply chain. “The problem is it can take between seven to 10 years to explore a green mine. That’s the real issue, not the availability of the cobalt,” he says.

Canada-based First Cobalt, which describes itself as the largest exploration mining company in the world, is focusing on its Greater Cobalt Project: more than 10,000 hectares of prospective land that includes over 50 past producing mines, a mill and the only permitted cobalt refinery in North America capable of producing battery materials. The company was founded in early 2017 to satisfy the exploding appetite for cobalt, driven by the electric vehicle market.

Last year, the average annual price of cobalt more than doubled, thanks to consumer demand, the limited availability of the metal on the spot market, and a spike in its purchase by investors. This beat the growth forecast for world refined cobalt supply, which was anticipated to increase at a lower rate than consumption. Today, the Democratic Republic of Congo continues to dominate the global market as the leading source of mined cobalt, supplying more than 50 per cent of cobalt mine production worldwide. Most cobalt is mined as a byproduct of copper or nickel.

Miners haven’t looked hard enough for cobalt

One of the main challenges with cobalt is finding it in “economic quantities and miners have never looked for it”, says Mell. “Everything else that we mine is from copper and nickel. There is a big paradigm shift that we are now looking at cobalt.”

“First Cobalt is one of the first companies doing real grassroots exploration. It’s a lot of heavy lifting and small dollars and we probably need a dozen companies to do that,” he says, adding that the company has invested in a number of acquisitions to expand its operations.

The problem is it can take between seven to 10 years to explore a green mine. That’s the real issue, not the availability of the cobalt

Cobalt is a small market, with just 110,000 tonnes produced in 2017, compared to 19.7 million tonnes of copper. Mell believes that the company’s Iron Creek project in Idaho has the potential to produce up to one per cent of global supply, but cautions that these are early days for the newly acquired asset.  With cobalt trading at just over $80,000 per tonne on the LME, this would imply gross revenue of over $80 million per year.

Despite Tesla’s Elon Musk declaring the company used less than three per cent of cobalt in its batteries and will use “none in next gen”, Mell believes you cannot take cobalt out of the battery because it comes down to safety and the risk of catching fire.

There are other alternatives being explored such as hydrogen to replace lithium batteries, but Mell also believes the commercialisation of these technologies will take between seven to eight years. “I think cobalt has got a role and by time we find enough cobalt it will become less of a concern,” he adds.

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One comment

  • Mazhar e Saeed Kiyani

    July 6, 2018 at 10:22 am

    Though the Cobalt is scarce at present yet new discoveries will bring the supply demand equation at par in near future. We at Premiere Metals and Minerals Development Corporation, are working in Asia and hopefully things will improve.

    Reply

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