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Cobalt Mining Primer

Cobalt Overview

Cobalt is a base metal with favorable properties and important uses. Cobalt’s key chemical properties are its high melting point (1,493 degrees Celsius/2,719 degrees Fahrenheit), its wear-resistance, and its electrical conductivity. Cobalt has a wide variety of uses including batteries, alloys, and catalysts.[i]

Cobalt is found in low concentrations making it uneconomical to produce it on its own. Instead, cobalt is mined as a by-product of copper and nickel mining. As cobalt is a by-product, its supply is inelastic, therefore the supply of cobalt relies on the price of nickel and copper.  As a result, cobalt is subject to significant price fluctuations.[ii]

Cobalt End Use


In 2006, cobalt’s end use was primarily alloys due to ability to maintain strength and resist ware. However, with the increased popularity of electric cars, cobalt is now primarily used in rechargeable batteries (including smartphone batteries). Other uses include pigments & coloring (ex: blue color in glass and ceramics), electroplating, catalysts, and artificial hips!

Global Demand

In 2016, 93,950 tonnes of cobalt were consumed. In 2017, cobalt demand rose above 100,000 metric tonnes (MT) for the first time and is expected to reach 120,000 MT by 2020. Demand is expected to exceed supply in 2022.[i] According to a European Commissions’ presentation at the Brussels EU Raw Material Week in November 2018, demand is expected to outgrow supply by 64,000 MT in 2030.[ii]

The majority of the increase in demand is driven from electric cars.[iii] A power unit in an electric car contains between four kg and 30 kg (8.8 lbs to 66.1 lbs) with a typical unit containing 15 kg (33 lbs) of cobalt. A smart phone battery, on the other hand, contains between five grams and 20 grams (0.01 lbs to 0.04 lbs).[iv]

Transition to Electric Batteries

Internal Combustion Engine Phase Outs

In addition to an increase in demand of electric cars, there is projected to be a decrease in the supply of gasoline/dieselpowered cars. Major governments have simultaneously began banning the sale of gasoline/diesel vehicles. Key countries include Norway (Electric vehicles only starting 2030), the Netherlands (Electric vehicles only starting 2025), India (targeting selling only electric vehicles starting 2030, starting with 15% in 2023) [v], and China (timeline TBD).[vi]

Cobalt-free Batteries

The cobalt content of lithium-ion batteries is expected to be reduced in favor of nickel. Substitution of cobalt in batteries is expected to result in a loss of product performance (i.e. life cycle) [vii]. The industry standard is an eight-year warranty on the battery to retain 80 percent of the original capacity. As the proportion of nickel is increased, the fuel cells are more likely to overheat leading to combustion. With cobalt’s supply-chain difficulties, automakers have been working towards reducing the cobalt content in their batteries. Tesla, for example, already uses less cobalt on average than the rest of the industry yet is still trying to lower this amount.[viii] In May 2018 Panasonic, Tesla’s battery supplier, announced they will be developing cobalt-free batteries. That said, Panasonic immediately ordered more cobalt to meet its current production needs.[ix]

Cobalt Supply

Global reserves are estimated at 6.9M MT.[x] The Democratic Republic of Congo (DRC) holds more than half of the world’s reserves. Other major countries include Australia, Russia, and Canada.

DRC’s market share was 66% in 2018 – Wood Mackenzie expects its market share to increase to 73% by 2025 as producers expand mines throughout the country.[xi]


Democratic Republic of Congo (DRC)

The DRC holds approximately 49.5% of the world’s cobalt reserves. The DRC is politically unstable and has a history of child labor and human rights abuse. In 2016 Amnesty International released a report highlighting these issues and citing that 20% of exported cobalt is mined by artisanal miners (local miners and small cooperatives) – which include children as young as seven mining by hand and using obsolete equipment.[i]

Recently BMW has pledged to not purchase cobalt from the DRC. If other major companies follow suit, this presents other countries an opportunity to temporarily seize additional market share until the DRC can verify their supply chain does not use artisanal miners.


Although there is little cobalt mining in China itself, Chinese companies have been purchasing DRC mines and miners, including eight of the 14 largest cobalt mining companies. The next step in the cobalt supply chain is refining the product (refining turns cobalt ores into cobalt metals/powders/chemicals).

In addition to its rising cobalt mining control, China controls more than 80 percent of the cobalt chemical production. After cobalt is refined into cobalt chemicals, the product is combined with other metals (typically manganese or aluminum) to make cathodes (the positively charged part of a battery). With no way to avoid Chinese cobalt, China has a significant cobalt supply advantage.[ii]

North America

North America’s cobalt industry is quite small. That said, with the near-completion of First Cobalt’s Ontario refinery, North American electrical vehicle producers will have access to a cruelty-free supply of cobalt. First Cobalt’s refinery can produce cobalt sulfate for batteries or cobalt metal for aerospace uses, military uses, or other industrial uses.[iii] Cobalt, a northern Ontario town once known for its silver mines, is poised to boom for the first time since the 1980s. Silver miners took silver, but left all cobalt behind[iv]. Other North American mines can be found in northern Canada and Idaho (Blackbird Mine and Idaho Mine)[v].

Major Producers


2017 production: 27,400

2018 Production: 42,200 tonnes

Glencore is a Swiss-British company working with metal and minerals, energy, and agriculture. Cobalt is relatively minor part of the business. Cobalt is produced as a by-product of copper mining in the DRC. In addition to the DRC, they also produce cobalt as a by-product of nickel mining in Australia and Canada. Glencore also recycles cobalt-bearing materials to increase their supply. Their Canadian operations include the Raglan Mine (northern Quebec) and Sudbury Integrated Nickel Operations (northern Ontario).[vi] In Q1 2019, Glencore produced 9.9 kilotonnes of cobalt, a 62% increase from Q1 2018.[vii]

China Molybdenum

2017 Production: 16,419 tonnes

2018 Production: 18,747 tonnes

Although China Molybdenum is the world’s second largest cobalt producer, cobalt is not one of its major business lines. The company also produces melts, and processes other metals.[viii]

Pure Play Companies

Although most cobalt producers are large companies with a small (in comparison to their overall business) stake in cobalt, there are smaller pure-play cobalt producers. Key North American companies included Cobalt 27 Capital Corp and First Cobalt.

Cobalt 27 Capital

Cobalt 27 is a pure-play company with 10 royalties and 1 stream [ix]. The company holds approximately 2,906 MT of physical cobalt as well.

First Cobalt

First Cobalt, unlike Cobalt 27, is a producer. First Cobalt’s key projects[x] include a 1,700 acres of land in Idaho (known as the Iron Creek Project- which should contain 45 million pounds if cobalt and 175 million pounds of copper [xi]), a cobalt refinery producing battery materials, and finally the possession of 50+ mines in Greater Cobalt, Ontario[xii].

Price History

*Source: Bloomberg Terminal




























Metals & MiningCobalt Mining Primer · Valuation of Metals & Mining Companies Part III: Credit · Valuation of Metals & Mining Companies Part II: Multiples · Valuation of Metals & Mining Companies Part I: Introduction · Types of Mining Methods · Overview of Senior Gold Producers in Canada · Steel Industry Trends · Net Asset Value in Mining · Metals & Mining Streaming Primer · Precious Metals – Gold, Silver and PGM · Metals and Mining Trends · Metals & Mining Investment Banking · The Economy in Chile ·
Chayten Hansra
Chayten Hansra
Chayten is a student at UBC entering his final year in September. He is currently working with EY’s Transaction Advisory Services team as a Real Estate Analyst (Co-op). Prior to that, Chayten was an Acquisitions/Investment Management Analyst (Co-op) at Bentall Kennedy. He is also pursuing the CFA Level 1 exam in June. Outside of academics and work, Chayten enjoys skiing, cheesecake, and fantasy sports with his friends.

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