Indonesia has become the world’s second largest supplier of cobalt, contributing to a sharp drop in the price of the battery metal and adding to Western concerns over Beijing’s dominance in the electric car supply chain.
The Southeast Asian country generated 9,500 tonnes of cobalt last year, or 5% of global supply, compared to minimal volumes before 2021, according to an annual market report from the Cobalt Institute, a group industrial. This means it has overtaken established growers in Australia and the Philippines.
Increased supply of Indonesian cobalt – a by-product of its rapidly growing nickel industry – helped push prices down from $40 a pound in April last year to around $15, according to Fastmarkets. .
Despite its rapid growth, Indonesia remains far behind the world’s largest supplier, the Democratic Republic of Congo, which has a global share of 73%.
However, concerns over human rights in the DRC’s mines, as well as China’s operational control over many of them, have caused automakers to seek alternative sources of supply or try change battery chemistry to reduce the use of cobalt.
The United States introduced the Inflation Reduction Act while the EU has introduced the Critical Raw Materials Act in a bid to reduce its dependence on China for raw materials for electric cars and promote sourcing domestically or from friendly countries .
Indonesia’s emergence as a supplier of cobalt will do little to allay these concerns, given that it is driven by joint ventures between Chinese firms and local groups.
“China’s dominance in Indonesia poses risks to the broader market, similar to the dominance of DRC production,” the report said, adding that it could undermine US and European industrial policy goals aimed at reduce reliance on China through the electric vehicle supply chain. .
Global cobalt supply jumped 21% in 2022 to 198,000 tonnes, far more than the 13% increase in demand.
The price rebounded strongly for a year from the summer of 2021, but has since plunged, pushed by the emergence of Indonesia, abundant supplies from the DRC and a drop in wearable electronics sales.
Coupled with falling lithium prices, the fall has provided some relief for battery makers.
But it has also created challenges for setting up and operating new projects in the west. For example, listed in Australia at Jervois The project in Idaho, which was to be the first U.S. cobalt mine to open in decades, suspended final construction in late March due to low cobalt prices and high construction costs.
The report indicates that cobalt prices are expected to remain below $20 per pound this year and that the market will be well supplied until at least the middle of the decade due to the strong growth in supply from the DRC and from Indonesia.
Rising demand for electric vehicles would subsequently drive the market into a structural shortage towards the end of the decade, with demand expected to more than double to 400,000 tonnes by 2030, he said.
Indonesian cobalt also poses a growing environmental problem for automakers since its global warming potential at 36 kilograms of CO₂ per kilogram of cobalt is almost four times greater than the supply from the DRC.
—————————————————-
Source link