As Cobalt Declines, Demand-Growth Rises by 500%

Circular initiatives may be on the rise, but an impending commodity crisis for cobalt indicates that we still haven’t learned our lesson as far as resource depletion is concerned.

The ferromagnetic metal is primarily used in the preparation of magnetic, wear-resistant and high-performance alloys and is a critical component of batteries designed for electric vehicles, laptops, smartphones and a host of other electronics.

And we’re running out.

The super metal has run at a surplus for years, but with growing demand for electric vehicles and consumer electronics, cobalt supply is on the decline. By the end of this year, it is expected that the resource will have run out, yet demand growth is projected at 500 percent.

While this could be bad news for tech heavy hitters such as Amazon, Apple, General Electric and Tesla, who rely heavily on the material, investors view the growing deficit as a prime investment opportunity and are clamoring to get their hands on the resource.

According to a Reuters report, many traders and hedge funds having been hoarding cobalt since 2015, when prices were cheap, and are currently waiting for market value to skyrocket. Switzerland’s Pala Investments and China’s Shanghai Chaos have already staked a claim to 17 percent of last year’s global production. Since November 2016, cobalt prices have already risen by 50 percent.

Resource availability isn’t the only issue at hand. Cobalt is a notorious conflict material and the industry has long been plagued by human rights violations. A significant proportion of cobalt production — more than 50 percent — has its roots in the Democratic Republic of Congo, where the use of child labor has repeatedly spurred a firestorm of criticism from human rights groups. As consumers increasingly demand brand transparency, tech companies are being forced to answer tough questions about their supply chains and find more ethical sources.

Applying circular principles to supply chains is one way brands can get around the problem. In its annual Environmental Responsibility Report, tech giant Apple said it was researching new ways to reduce reliance on conflict materials, one of which includes recovering cobalt from lithium-ion batteries.

Ingenuity isn’t the only answer — companies such as US Cobalt have started exploring the possibility of homegrown exploitation, with the goal of putting the US on the cobalt map and giving the economic a major — though perhaps temporary — boost.

But in a world where cobalt-dependent electronics and to a large extent EVs have become embedded into everyday life, will this be enough?

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