Cobalt powered World : Volatility and Supply Concentration

The cobalt market faces substantial threats due to its high concentration in production and refining, particularly in politically unstable regions and major refining hubs, which also impacts its monetary values. The Democratic Republic of Congo (DRC) supplies approximately 70% of the world's cobalt, translating to about 130,000 tons produced in 2023 out of a global total of approximately 200,000 tons, with cobalt prices hovering around $35,000 per ton in 2023. According to the World Bank, political instability in the DRC could lead to a 20% disruption in global production within the next five years, potentially driving cobalt prices up by 15-25% due to supply shortages. This prediction aligns with a report by the International Energy Agency (IEA), which notes that geopolitical risks could exacerbate market volatility, pushing prices even higher and impacting sectors reliant on cobalt.

On the refining side, China's dominance is a critical concern. Chinese firms such as Zhejiang Huayou Cobalt, Jinchuan Group, and GEM Co. control over 60% of global refining capacity. Roskill's 2023 report forecasts that if China implements stricter environmental regulations, refining capacity could be reduced by 15-25% by 2030. BloombergNEF further predicts that such regulatory changes could lead to a 20% reduction in refining output, causing a spike in cobalt prices by 10-20%. With cobalt’s price already at around $35,000 per ton, such disruptions could result in prices soaring to approximately $42,000 per ton or more. Benchmark Mineral Intelligence supports this view, indicating that price increases due to supply chain disruptions could significantly impact electric vehicle manufacturers and other industries dependent on cobalt, amplifying the economic impact of these risks.

These monetary values and market predictions underscore the substantial financial implications of the market's concentration and associated risks. The potential for increased prices and supply shortages highlights the urgent need for diversified sourcing and more resilient supply chains to mitigate the economic impact on industries dependent on cobalt.