At Stratfor, we use geopolitics to understand the constraints and advantages that geography confers on a country and the political, technological and economic decisions it compels.
As the demand for electric vehicles increases over the coming decades, so, too, will the demand — and the price — for the raw materials required to produce them. Increased demand for elements such as lithium and cobalt will lead to potential supply bottlenecks over the next several years.
And while the media has touted the potential of lithium — the eponymous component of lithium-ion batteries — to be the raw material that powers the gradual transition away from fossil fuel-reliant transportation, it has understated the significance of one element in the equation: cobalt. Lithium-ion batteries require lithium, yes, but they also require something else. Under the constraints of present technology, that something is, more often than not, cobalt.
From Teacups to Electric Cars
Cobalt has been utilized since the days of antiquity, when craftsmen employed it (albeit unknowingly) to give glass and ceramics a telltale dark blue color. In the 18th century, Swedish scientist Georg Brandt isolated the metal.
And since then, cobalt has played a role in many niche markets, with its heat resistance and strength proving a necessity in magnetic mixtures and metal alloys such as those used in jet engines. Now, as a key component in lithium-ion batteries, cobalt has become an important commodity in the growing electronics and electric vehicle markets.
Roughly half of all cobalt consumed globally goes to produce batteries used for grid storage, consumer electronics and electric vehicles. As the popularity of electric vehicles grows, so too does the demand for cobalt. Mining heavy hitter (and major cobalt producer) Glencore estimates that if electric vehicles account for 30 percent of new car sales in 2030, three times the total amount of cobalt produced in 2016 will be required.
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