Cobalt: A Precarious Supply Chain
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Cobalt: A Precarious Supply Chain

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Cobalt: A Precarious Supply Chain

Cobalt: A Precarious Supply Chain

How does your mobile phone last for 12 hours on just one charge?

It’s the power of cobalt, along with several other energy metals, that keeps your lithium-ion battery running.

The only problem? Getting the metal from the source to your electronics is not an easy feat, and this makes for an extremely precarious supply chain for manufacturers.

Our infographic today comes to us from LiCo Energy Metals, and it focuses on where this important ingredient of green technology originates from, and the supply risks associated with its main sources.

What is Cobalt?

Cobalt is a transition metal found between iron and nickel on the periodic table. It has a high melting point (1493°C) and retains its strength to a high temperature.

Similar to iron or nickel, cobalt is ferromagnetic. It can retain its magnetic properties to 1100°C, a higher temperature than any other material. Ferromagnetism is the strongest type of magneticism: it’s the only one that typically creates forces strong enough to be felt, and is responsible for the magnets encountered in everyday life.

These unique properties make the metal perfect for two specialized high-tech purposes: superalloys and battery cathodes.

Superalloys

High-performance alloys drive 18% of cobalt demand. The metal’s ability to withstand intense temperatures and conditions makes it perfect for use in:

  • Turbine blades
  • Jet engines
  • Gas turbines
  • Prosthetics
  • Permanent magnets

Lithium-ion Batteries:

Batteries drives 49% of demand – and most of this comes from cobalt’s usage in lithium-ion battery cathodes:

Type of lithium-ion cathodeCobalt in cathodeSpec. energy (Wh/kg)
LFP0%120
LMO0%140
NMC15%200
LCO55%200
NCA10%245

The three most powerful cathode formulations for li-ion batteries all need cobalt. As a result, the metal is indispensable in many of today’s battery-powered devices.

  • Mobile phones (LCO)
  • Tesla Model S (NCA)
  • Tesla Powerwall (NMC)
  • Chevy Volt (NMC/LMO)

The Tesla Powerwall 2 uses approximately 7kg, and a Tesla Model S (90 kWh) uses approximately 22.5kg of the energy metal.

The Cobalt Supply Chain

Cobalt production has gone almost straight up to meet demand, and production has more than doubled since the early 2000s.

But while the metal is desired, getting it is the hard part:

1. No native cobalt has ever been found in nature.

There are four widely-distributed ores that exist, but almost no cobalt is mined from them as a primary source.

2. Most cobalt production is mined as a by-product.

Mine source% cobalt production
Nickel (by-product)60%
Copper (by-product)38%
Cobalt (primary)2%

This means it is hard to expand production when more is needed.

3. Most production occurs in the DRC, a country with elevated supply risks:

CountryTonnes%
United States5240.4%
China1,4171.2%
DRC67,97555.4%
Rest of World52,78543.0%
Total122,701100.0%

(Source: CRU, estimated production for 2017, tonnes)

The Future of Cobalt Supply

Companies like Tesla and Panasonic need reliable sources of the metal, and right now there aren’t many failsafes.

The U.S. hasn’t mined cobalt in significant volumes since 1971, and the USGS reports that the United States only has 301 tonnes of the metal stored in stockpiles.

The reality is that the DRC produces about half of all cobalt, and it also holds approximately 47% of all global reserves.

Why is this a concern for end-users?

1. The DRC is one of the poorest, corrupt, and most coercive countries in the planet.

It ranks:

  • 151st out of 159 countries in the Human Freedom Index
  • 176th out of 188 countries on the Human Development Index
  • 178th out of 184 countries in terms of GDP per capita ($455)
  • 148th out of 169 countries in the Corruption Perceptions Index

2. The DRC has had more deaths from war since WWII than any other country on the planet.

Recent wars in the DRC:

  • First Congo War (1996-1997) – A foreign invasion by Rwanda that overthrew the Mobutu regime.
  • Second Congo War (1998-2003) – The bloodiest conflict in world history since WW2 with 5.4 million deaths.

3. Human Rights in Mining

The DRC government estimates that 20% of all cobalt production in the country comes from artisanal miners – independent workers who dig holes and mine ore without sophisticated mines or machinery.

There are at least 100,000 artisanal cobalt miners in the DRC, and UNICEF estimates that up to 40,000 children could be in the trade. Children can be as young as seven years old, and they can work up to 12 hrs with physically demanding work, earning $2 per day.

Meanwhile, Amnesty International alleges that Apple, Samsung, and Sony fail to do basic checks in making sure the metal in their supply chains did not come from child labor.

Most major companies have vowed that any such practices will not be tolerated in their supply chains.

Other Sources

Where will tomorrow’s supply come from, and will the role of the DRC eventually diminish? Will Tesla achieve its goal of a North American supply chain for its key metal inputs?

Mining exploration companies are already looking to regions like Ontario, Idaho, British Columbia, and the Northwest Territories to find tomorrow’s deposits:

Ontario: Ontario is one of the only places in the world where cobalt-primary mines that have existed. This camp is nearby the aptly named town of Cobalt, Ontario, which is located halfway between Sudbury – the world’s “Nickel Capital”, and Val-d’Or, one of the most famous gold camps in the world.

Idaho: Idaho is known as the “Gem State” while also being known for its silver camps in Couer D’Alene – but it has also been a cobalt producer in the past.

BC: The mountains of British Columbia are known for their rich gold, silver, copper, zinc, and met coal deposits. But cobalt often occurs with copper, and some mines in BC have produced cobalt in the past.

Northwest Territories: Cobalt can also be found up north, as the NWT becomes a more interesting mineral destination for companies. 160km from Yellowknife is a gold-cobalt-bismuth-copper deposit being developed.

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Energy

Ranked: Nuclear Power Production, by Country

Nuclear power accounted for 10% of global electricity generated in 2020. Here’s a look at the largest nuclear power producers.

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Nuclear Power Production by Country

This was originally posted on Elements. Sign up to the free mailing list to get beautiful visualizations on natural resource megatrends in your email every week.

Nearly 450 reactors around the world supply various nations with nuclear power, combining for about 10% of the world’s electricity, or about 4% of the global energy mix.

But while some countries are turning to nuclear as a clean energy source, nuclear energy generation overall has seen a slowdown since its peak in the 1990s.

The above infographic breaks down nuclear electricity generation by country in 2020 using data from the Power Reactor Information System (PRIS).

Ranked: The Top 15 Countries for Nuclear Power

Just 15 countries account for more than 91% of global nuclear power production. Here’s how much energy these countries produced in 2020:

RankCountryNumber of Operating ReactorsNuclear Electricity Supplied
[GWh]
% share
#1U.S. 🇺🇸96789,91930.9%
#2China 🇨🇳50344,74813.5%
#3France 🇫🇷58338,67113.3%
#4Russia 🇷🇺39201,8217.9%
#5South Korea 🇰🇷24152,5836.0%
#6Canada 🇨🇦1992,1663.6%
#7Ukraine 🇺🇦1571,5502.8%
#8Germany 🇩🇪660,9182.4%
#9Spain 🇪🇸755,8252.2%
#10Sweden 🇸🇪747,3621.9%
#11U.K. 🇬🇧1545,6681.8%
#12Japan 🇯🇵3343,0991.7%
#13India 🇮🇳2240,3741.6%
#14Belgium 🇧🇪732,7931.3%
#15Czechia 🇨🇿628,3721.1%
Rest of the World 🌎44207,3408.1%
Total4482,553,208100.0%

In the U.S., nuclear power produces over 50% of the country’s clean electricity. Additionally, 88 of the country’s 96 operating reactors in 2020 received approvals for a 20-year life extension.

China, the world’s second-largest nuclear power producer, is investing further in nuclear energy in a bid to achieve its climate goals. The plan, which includes building 150 new reactors by 2035, could cost as much as $440 billion.

On the other hand, European opinions on nuclear energy are mixed. Germany is the eighth-largest on the list but plans to shutter its last operating reactor in 2022 as part of its nuclear phase-out. France, meanwhile, plans to expand its nuclear capacity.

Which Countries Rely Most on Nuclear Energy?

Although total electricity generation is useful for a high-level global comparison, it’s important to remember that there are some smaller countries not featured above where nuclear is still an important part of the electricity mix.

Here’s a breakdown based on the share of nuclear energy in a country’s electricity mix:

RankCountryNuclear Share of Electricity Mix
#1France 🇫🇷70.6%
#2Slovakia 🇸🇰53.1%
#3Ukraine 🇺🇦51.2%
#4Hungary 🇭🇺48.0%
#5Bulgaria 🇧🇬40.8%
#6Belgium 🇧🇪39.1%
#7Slovenia 🇸🇮37.8%
#8Czechia 🇨🇿37.3%
#9Armenia 🇦🇲34.5%
#10Finland 🇫🇮33.9%
#11Switzerland 🇨🇭32.9%
#12Sweden 🇸🇪29.8%
#13South Korea 🇰🇷29.6%
#14Spain 🇪🇸22.2%
#15Russia 🇷🇺20.6%
#16Romania 🇷🇴19.9%
#17United States 🇺🇸19.7%
#18Canada 🇨🇦14.6%
#19United Kingdom 🇬🇧14.5%
#20Germany 🇩🇪11.3%

European countries dominate the leaderboard with 14 of the top 15 spots, including France, where nuclear power is the country’s largest source of electricity.

It’s interesting to note that only a few of these countries are top producers of nuclear in absolute terms. For example, in Slovakia, nuclear makes up 53.6% of the electricity mix—however, the country’s four reactors make up less than 1% of total global operating capacity.

On the flipside, the U.S. ranks 17th by share of nuclear power in its mix, despite producing 31% of global nuclear electricity in 2020. This discrepancy is largely due to size and population. European countries are much smaller and produce less electricity overall than larger countries like the U.S. and China.

The Future of Nuclear Power

The nuclear power landscape is constantly changing.

There were over 50 additional nuclear reactors under construction in 2020, and hundreds more are planned primarily in Asia.

As countries turn away from fossil fuels and embrace carbon-free energy sources, nuclear energy might see a resurgence in the global energy mix despite the phase-outs planned in several countries around the globe.

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Energy

The Periodic Table of Commodity Returns (2012-2021)

Energy fuels led the way as commodity prices surged in 2021, with only precious metals providing negative returns.

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commodity returns 2021 preview

The Periodic Table of Commodity Returns (2022 Edition)

For investors, 2021 was a year in which nearly every asset class finished in the green, with commodities providing some of the best returns.

The S&P Goldman Sachs Commodity Index (GSCI) was the third best-performing asset class in 2021, returning 37.1% and beating out real estate and all major equity indices.

This graphic from U.S. Global Investors tracks individual commodity returns over the past decade, ranking them based on their individual performance each year.

Commodity Prices Surge in 2021

After a strong performance from commodities (metals especially) in the year prior, 2021 was all about energy commodities.

The top three performers for 2021 were energy fuels, with coal providing the single best annual return of any commodity over the past 10 years at 160.6%. According to U.S. Global Investors, coal was also the least volatile commodity of 2021, meaning investors had a smooth ride as the fossil fuel surged in price.

Commodity2021 Returns
Coal160.61%
Crude Oil55.01%
Gas46.91%
Aluminum42.18%
Zinc31.53%
Nickel26.14%
Copper25.70%
Corn22.57%
Wheat20.34%
Lead18.32%
Gold-3.64%
Platinum-9.64%
Silver-11.72%
Palladium-22.21%

Source: U.S. Global Investors

The only commodities in the red this year were precious metals, which failed to stay positive despite rising inflation across goods and asset prices. Gold and silver had returns of -3.6% and -11.7% respectively, with platinum returning -9.6% and palladium, the worst performing commodity of 2021, at -22.2%.

Aside from the precious metals, every other commodity managed double-digit positive returns, with four commodities (crude oil, coal, aluminum, and wheat) having their best single-year performances of the past decade.

Energy Commodities Outperform as the World Reopens

The partial resumption of travel and the reopening of businesses in 2021 were both powerful catalysts that fueled the price rise of energy commodities.

After crude oil’s dip into negative prices in April 2020, black gold had a strong comeback in 2021 as it returned 55.01% while being the most volatile commodity of the year.

Natural gas prices also rose significantly (46.91%), with the UK and Europe’s natural gas prices rising even more as supply constraints came up against the winter demand surge.

Energy commodity returns 2021

Despite being the second worst performer of 2020 with the clean energy transition on the horizon, coal was 2021’s best commodity.

High electricity demand saw coal return in style, especially in China which accounts for one-third of global coal consumption.

Base Metals Beat out Precious Metals

2021 was a tale of two metals, as precious metals and base metals had opposing returns.

Copper, nickel, zinc, aluminum, and lead, all essential for the clean energy transition, kept up last year’s positive returns as the EV batteries and renewable energy technologies caught investors’ attention.

Demand for these energy metals looks set to continue in 2022, with Tesla having already signed a $1.5 billion deal for 75,000 tonnes of nickel with Talon Metals.

Metals price performance 2021

On the other end of the spectrum, precious metals simply sunk like a rock last year.

Investors turned to equities, real estate, and even cryptocurrencies to preserve and grow their investments, rather than the traditionally favorable gold (-3.64%) and silver (-11.72%). Platinum and palladium also lagged behind other commodities, only returning -9.64% and -22.21% respectively.

Grains Bring Steady Gains

In a year of over and underperformers, grains kept up their steady track record and notched their fifth year in a row of positive returns.

Both corn and wheat provided double-digit returns, with corn reaching eight-year highs and wheat reaching prices not seen in over nine years. Overall, these two grains followed 2021’s trend of increasing food prices, as the UN Food and Agriculture Organization’s food price index reached a 10-year high, rising by 17.8% over the course of the year.

Grains price performance 2021

As inflation across commodities, assets, and consumer goods surged in 2021, investors will now be keeping a sharp eye for a pullback in 2022. We’ll have to wait and see whether or not the Fed’s plans to increase rates and taper asset purchases will manage to provide price stability in commodities.

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