The price of cobalt has jumped 40 per cent so far this year on persistent demand from electric vehicle makers, underlining the challenge in reducing reliance on the rare metal to make batteries for longer-range cars.
Electric carmakers including Tesla and Volkswagen have pledged over the coming years to reduce their use of cobalt, which is largely dependent on mining in the Democratic Republic of Congo, deterred by human rights abuses in the supply chain and by the high price.
Prices for the world’s most expensive battery metal hit their highest level since January 2019 in March — at $25 a pound — and currently hover around $21, according to data company Fastmarkets. Analysts at RBC say they expect cobalt prices to reach $28.50 a pound this year, and rise to $40 in 2024 as alternatives are expected to remain scarce.
After a 40 per cent rise in 2020, electric car sales more than doubled in the first quarter of 2021 compared with the same period a year earlier, according to the International Energy Agency.
“The supply side is not reacting right now,” said Michael Widmer, an analyst at Bank of America. “So I forecast really big deficits potentially, which begs the question, where will the cobalt come from?”
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