How Batteries Sparked a Cobalt Frenzy and What Could Happen Next – by Mark Burton (Bloomberg News – December 17, 2017)

Cobalt left other metals in the dust this year, driven by demand from electric carmakers like Tesla Inc. But with new supply coming online and high prices likely to spur substitution and recycling, the market for the key battery component could prove choppier next year. Here are five themes that will capture the market’s attention in 2018.

Record Prices

After prices more than tripled in the past two years, cobalt has become a valuable prize for the handful of miners producing it at scale. The global market has increased from about $4 billion a year at the end of 2016 to about $8 billion now and is roughly equal in size to the tin market.

But cobalt could be set to level out in 2018. BMO Capital Markets sees prices averaging about $68,200 a ton from about $72,000 now as Glencore Plc and Eurasian Resources Group ramp up major new projects in 2018 and 2019.

New Supply

Because cobalt’s mainly mined as a byproduct of copper and nickel, higher prices don’t tend to stimulate new supply in the way they would in other commodity markets. But with cobalt delivering major windfalls, producers are doing their best to ramp up output.

The larger-than-expected expansion at Glencore’s Katanga project, in particular, looks set to delay the onset of a shortage that many analysts see emerging as usage in electric vehicles starts to spike toward the end of the decade.

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